To buy or not to buy?
by Startacus Admin
.jpg "Richard Myers")
Got your eye on a business you fancy buying? Transmit Start-Ups’ Commercial Director Richard Myers has been in your shoes and shares a few lessons learnt to help you decide if it’s worth shelling out.
There are lots of guides out there on how to buy a business. It’s a process, there’s definitely a ‘right’ way to do it, whether you’re buying a business that’s currently trading or not.
So read those guides. They’ll give you facts.
What I want to share with you, is some insight that I’ve gleaned from more than twenty years as an entrepreneur, and a few dalliances in purchasing businesses to expand.
Listen to the jungle drums
Last year, we bought a competitor of ours who had run into some difficulties – we knew this because we’re always paying close attention to the other businesses operating in our sector.
But there are often signs that a business might be ripe for purchasing; people decide to sell for all kinds of reasons. And people talk. 
The best business transactions don’t usually take place once a business has been advertised ‘for sale’ somewhere, and the more people who know, the more chance you’ll see the price and terms change in their favour.
What’s in it for your business?
Deal in logic, not emotion – because there are both logical and emotional reasons to purchase businesses, but only the former will pay off in the longer term. As a business investment, is this a sound choice to make?
It always seems attractive to remove one of your competitors from the equation, but at what cost? What traction do they have and how can their customer base help you? Buying them doesn’t mean all of their customers will necessarily follow to become customers of yours.
Reputation, reputation, reputation
If you’re buying a business that you’re going to continue to trade, especially if it’s faced difficulties in the past, then invest in doing some really thorough reputational research. 
If there are customer reviews or similar, are they good? Are they genuine? Look to independent forums where the business couldn’t have curated its own content, try to get a feel for any underlying sentiment about the business and its operations.
Look after their customers – be open, and honest. Even if you have to make decisions that are not in their favour, you can keep a degree of loyalty from them.
What’s your overall aim?
Whether your focus is on increasing market share, or diversifying, you’ll need a sound strategic plan that considers all of your options before you start shopping around. Consider whether acquisitions should be vertical or horizontal – are you looking to snap up your competitors or consolidate your supply chain?
I spent a good deal of time working in the music industry, where the primary difference between major record labels and independents was that the big labels owned a good portion of their supply chain. They had their own studios, producers, manufacturing plants for physical media, distribution companies, and so on.
Independent labels worked mostly with outsourced supply chains, which they often made work very well, but never had the same ability to scale. But that was fine, because they weren’t interested in scale.
Can you make it pay?
Dragon’s Den style negotiations are rare, but high valuations aren’t necessarily. It’s important to keep valuations independent irrespective of how you intend to finance the purchase, but if you need to bring in external finance then shop around. Transmit Start-Ups is the leading deliverer of Start Up Loans, which can be used to help buy businesses that are already trading as well as franchises, and comes with a fixed 6%pa interest rate.
Follow your gut
Cruicially: a business is only worth what someone is actually willing to pay for it. Don’t risk your existing business unnecessarily.
Subscribe to our newsletter
If you would like to receive our startup themed newsletter, full of the latest startup opportunities, events, news, stories, tips and advice, then sign up here.
Bring! is a digital grocery tool that simplifies grocery shopping for you and anyone you are shopping for.
In a bid to help brands during the current pandemic, the GreenJinn grocery app makes some rapid changes to its service
Coronavirus & furloughing employees. Nichola Hailes of Payfit looks to answer some of the most frequently asked questions about the job retention scheme.
For startups entering the food industry, here's why accurate labelling on ready-to-eat food products is important.
Whether you’re looking to create a frugal startup, or it’s already up and running, here are 4 tips to reduce costs while keeping the work environment pleasant.
The Belfast-based startup that provides a fully managed 24/7 Software-as-a-Service (SaaS) for securely storing and sharing assets, packages and containers.
The insolvency technology startup secures funding to help support the UK's most vulnerable consumers to avoid bankruptcy
Darren Hockley, MD of Delta International on how millennials may be helping businesses face the current COVID-19 pandemic
The innovative startup that's enabling businesses to connect with their customers via personalised handwritten communication
The lowdown on the Estonian startup that has created a multiplayer game to help kids practice math facts in a fun way...
Published on: 29th June 2019
.png)
If you would like to enable commenting via your Startacus account, please enable Disqus functionality in your Account Settings.
- Cerebreon the Irish deep learning startup raises £1.5m in seed funding 31st Mar 2020 The insolvency technology startup secures funding to help support the UK's most vulnerable consumers to avoid bankruptcy
- Chivas Venture divides this year's $1m Venture Fund between 26 global Startups 23rd Mar 2020 In response to the COVID-19 pandemic, Chivas Divides its $1m No-Strings Venture Fund Between 26 Startups
- The open-source design of emergency ventilators for COVID-19 patients 20th Mar 2020 World Wide Community of over 500 designers engineers & medics finalising prototypes for safe scalable manufacture & rapid field deployment..
- Positive-ish reaction from small business and startup community to UK Chancellor’s Corona budget 11th Mar 2020 New UK Chancellor Rishi Sunak just delivered his first UK Budget. We took a look at first reactions from small business and startup leaders.
