In this video, Josh @ KnowYour.Business TV shares how you should approach buying a business (AND what you should NOT do)
He uses a florist business and the Australian tax office benchmarks as a case-study example. How To Buy A Business 101 explains the very first step of buying a business.
Do buyers really pay the 'business broker commission' through inflated prices that the seller has factored into the asking price?
As the sellers have entrusted the sale of their businesses to business brokers, the commission payable on the settlement is usually invoiced to the seller.
However, a popular misconception with buyers is that sellers often put up their asking price to cover the commission paid to brokers. Is this true?
Buyers often make early requests from sellers for many due-diligence documents, including (but not limited to) the annual Profit & Loss Statements, Balance Sheets, Goods & Services Tax (GST) Business Activity Statements (BAS), Turnover Reports, Franchise Reports, Tax Returns etc.
How should buyers approach sellers to get their hands on these documents?
Before you buy a business, you may need to analyse the impacts of your surroundings. A positive impact is to locate your business near an anchor store, such as Chemist Warehouse.
Chemist Warehouse is renowned for retail site locations outside major malls, typically on the main streets near the mall or in a hub. There are many reasons for this obvious retail site selection strategy, and this may also be an opportunity for you.
Are you thinking of buying a business to secure residency in Australia?
In Australia, business visa subclasses are often shrouded with misconceptions and misinformation. But for eligible applicants, buying or starting a business is an excellent pathway to residency but many potential applicants are unfamiliar with this visa.
This is not something a buyer would think about when shopping for a business, but what happens if the franchisor becomes financially insolvent? The franchise business model is not invincible if the recent examples are a sign of things to come.
Franchisees typically have less control over their own business so when the franchisor goes into administration and/or collapses as a business, the franchisees could be left to pick up the pieces.
A CASE STUDY
As I walked past a spanking, brand new Chinese restaurant in the heart of Sydney, it was quite obvious that the proud owner had wanted this to be a 'first-class' business and spared no expenses in making a loud statement for passerbys to see.
On the outside, the restaurant looked beautiful and artistic. Limestone walls, beautiful artisan shop fittings, mock-antique tables, chairs and theme equipment that was probably imported from China (and I know it isn’t cheap)....
Learn HOW MUCH Sydney businesses are selling for in 2020
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