Buying an established business
If you plan to buy an existing business, carefully analyse both the advantages and disadvantages. One advantage is that a good business history can increase the likelihood of a successful operation and ensure that finance is easier to obtain. Potential disadvantages can be overestimating the goodwill figure and a poor public image inherited from the previous owner.
As a prospective business owner you should determine the current worth of the business and its future prospects. Some important considerations are:
- Vendor - reason for sale of business
- Sales - patterns, trends, customer base, current suppliers
- Costs - fixed and variable costs, staff costs
- Profits - analyse financial records, future cash flow and profitability
- Assets - identify and check all assets, including intellectual property and leasing arrangements
- Liabilities - outstanding debts, refunds and warranties
- Purchase agreement - review carefully
- Tax - GST, Capital Gains Tax, stamp duty implications
- Legal issues - leases, business structure.
For advice and protection in buying a business we suggest that you seek the services of a solicitor, accountant or business adviser.
What to do...
- See the Tax Office for information for new businesses.
- Read intellectual property information for purchasing an existing business by visiting the Smart Start website.
- Refer to the Trade practices start-up checklist when thinking of buying a business.
- Contact your nearest Business Enterprise Centre for free advice and support.
- Consult an experienced business adviser, accountant or solicitor.
- Find information on buying an established business in your state or territory.
This content is supplied to Flying Solo via business.gov.au,
the Australian Government's principal website for business information and resources.
