Thinking of Buying a Business
First – Understand Its Physical Nature and Environment.
The first move most business buyers make is to seek and analyse the financial reports of a business to assess their further interest or not. Financial reports reflect the past financial performance of a business. Business buyers are ‘buying’ the future performance of a business. Granted, past financial performance is an indicator of future financial performance. However, the most important influences on the future performance of a business will be largely dictated by its physical nature and the environment in which it will operate into the future.
An inspection of a business and a discussion with its owners will reveal much more than that provided in financial reports. Additionally, the business buyer can arrange and partake in an inspection before incurring costs of 3rd party advisers.
It’s the smart way to making decisions early on whether or not the business is of interest and whether or not its worth paying 3rd party advisers for their views.
The physical nature and environment of a business largely governs;
- Where it has been and why;
- Where it is now and why; and
- Where it is going in the future and why.
The physical nature of a business to be investigated includes its demographics, industry, economy, location, premises and lease arrangements, employees, products and services, customers, suppliers, stock levels, competition, compliance and insurance matters, and management structure, systems and processes.
Once the risks that the physical nature and environment of the business have on its future outlook are understood, then the risks associated with it future profit levels can be judged. Thereafter, decisions on whether or not to proceed can be made with a more complete understanding of the business and its future prospects before incurring costs before they are really necessary.
Need more information, talk to me.
Graham Long
Kevin Lovewell
M: 0401 308 385
E: Click here to contact Kevin Lovewell
Member & Registered Business Valuer
Australian Institute of Business Brokers
Graham Long
M: 0428 649 791
E: Click here to contact Graham Long
Member & Registered Business Valuer
Australian Institute of Business Brokers
