Five Top Tips For Buying A Business
The ABBA Group specialise in selling service stations. In this guest article, Anthony Papas and Neville Cousins share their top five tips for buying a business.
Over many years in the business-brokering business, we have seen clients make wrong decisions because they were too emotionally involved or they became frustrated during the buying process.
The best deals are done when all parties are relaxed and not under pressure. Appointing an experienced buyer’s agent who is on your side can make the entire process run smoothly. An agent who has experience in the service station industry will be worth their weight in gold, because service stations often generate a great deal of interest when they hit the market.
Here are our top five tips for buying a service station:
- Buy in gloom and sell in boom – This is obvious, but time and again I have seen people overpay by buying a service station at the peak of its cycle or getting too emotionally involved. You don’t want to buy a business that is at its peak because you will be paying a premium price which may not be achievable if you decide to sell.
- There’s no place for emotions in business – Business and emotions don’t mix and if they do, the results are usually unfavourable. Emotions can cloud your decision making and may result in you overpaying for the service station or in you agreeing to conditions which aren’t in your best interests. A rational mind and professional approach are your best weapons when buying a business.
- Appoint a professional – Seeking help from an expert, who is not as emotionally attached to the outcome, helps you balance your thoughts with neutral feedback. You’re making a large investment and the advice, experience and knowledge of an expert can be invaluable. Opinions from key advisors such as accountants, solicitors and business valuers will help guide you in the right direction. Those who have experience and knowledge about buying and selling in the service station industry will be your best asset.
- Pay market value – Appoint someone who knows the ins and outs of how to value a service station, such as a professional business valuer. A business valuer should consider comparable recent sales and perform a proper due diligence process. This valuation will be a guide to ensure that you pay market value for a particular service station and not a dollar more.
- Talk to people – Keeping in mind the vendor’s desire for confidentiality, it’s still important to reach out to existing customers, competitors, suppliers and anyone else who deals with the business on a daily basis. These people are well placed to give you insights into how the service station is doing. This is another form of due diligence and is a key part of the business buying process. Relying solely on the numbers can be misleading because, as we all know, small business sellers are notorious for “massaging” them.