Buying a business can be a great way to get into a new market, or to expand an existing business through acquiring a competitor or supplier.
However, there’s a range of factors you need to consider before making a purchase. Here, we’ve compiled a guide to buying a business in the UK.
So you’ve decided you want to buy a business. There’s a number of reasons why you might want to do this. For example:
However, there are some important factors that you need to bear in mind before you take the leap. Not every business is an attractive investment proposition, and there are a few things that you need to look out for.
Buying a business can be a sound investment – but you need to make sure that you’ve considered all of these potential problems before you take the leap.
So buying a business seems attractive – but what if you don’t have the capital to begin with? Luckily, there is a range of alternative finance options that could help you buy a business with no money.
While you're thinking about buying a business, you might also be thinking about names. This might be the case if you already have an idea but you're not quite ready to get started on your project.
There's a common misconception that you need to 'buy' a business name. This isn't strictly true - business names themselves aren't normally traded in this way.
However, if you want to reserve a name so that you can start trading under it in the future, your best bet is to register a company with Companies House using that unique name.
You can search the Companies House records to make sure that nobody has taken it already. You'll then simply need to register a company with at least one director and at least one share issued. If you want, you can make the company dormant until you're ready to trade.
Family succession is common in business, but in order to make it work it needs to be managed carefully.
You can buy a business from a family member just as you would from anyone else, but it's worth thinking about the tax implications for the family member who's selling up. The seller may be eligible for Entrepreneurs' Relief, which can help to lower their Capital Gains Tax bill when they sell shares in a business or all or part of a business run as a sole trader or as part of a partnership.
You should also think carefully about managing the transition for any employees. Family succession can cause internal problems when it is felt that a family member is being parachuted into a role that should otherwise have fallen to an employee.
Close and open communication with employees at every level is crucial if you want to successfully manage a business that you're buying from a family member.
Buying an existing business can be a great way to gain a foothold in a market or expand through acquisition. As long as you tread carefully, buying a business can help you achieve your long-term goals.
If you're unsure about the idea of buying a business, you could always start your own. Take a look at these small business start up ideas for a bit of inspiration.
Have you come across any challenges when buying a business? Let us know below.
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