How to buy a business and ideas to expand your new venture

With 5.5m businesses in the UK, several thousand come up for sale each year.

At the time of writing, BusinessesForSale.com lists over 13,000 available firms in the UK and Business Sale Report says it has facilitated deals worth £5bn over the past 30 years.

In this article we explain how to go about buying a business, plus share tips on how an existing business can be expanded.

Buying a business

Buying an existing business can often be faster and easier than launching a new company of your own. Buying an established firm can also be a way to enable business growth for an existing one and a means to add potential customers.

Here are some tips on how to do it.

Decide what type of business to buy

Before buying a business, think about what type of business is most suited to your skills and lifestyle, as well as what you want to achieve by buying it.

Factors to consider include:

• how your skills and experience relate to buying a business
• the sectors you are most interested in
• the amount of money you have to invest
• the place you would like the business to located
• the level of risk you are willing to take
• your long-term ambitions and how much money you want to make

Seek professional advice

It is important you get professional advice when buying a business.

Consult a solicitor and an accountant for guidance on the risks involved and whether your personal circumstances suit buying a business.

You will also need their advice and help during the negotiation process and once you have made an offer for a business.

How to access finance to buy a business

If you require funding to buy the business, speak to your bank, specialist lenders or investors.

Your options include unsecured and secured loans as well as angel and venture capital investment.

You will need to put together a business plan which will help you see whether the business is viable or not going forward. If someone is selling a business to you, what is their reason for the sale, have they found it is not possible to take it forward or are they retiring and it is a solid business in need of a new owner?

The bank will expect a business plan before putting your request in front of their credit teams for review.

How to shortlist businesses to buy

There are various websites, such as the previously mentioned Business Sale Report and BusinessesForSale.com, that you can use to find a business to buy.

Other methods are speaking to other business owners at networking events, consulting commercial estate and lettings agents and speaking to relatives, friends and other contacts who may know of companies up for sale or run a business of their own that you could buy.

There are lots of factors you need to consider to ensure an existing business is right for you. They include:

• the reason the owner is selling
• the financial state of the business including profit and sales revenue
• the condition of any premises owned by the business
• the value of the business

Draw up a shortlist of businesses you are most interested in and arrange viewings.

Make an offer and carry out due diligence

Once you have decided which business you would like to buy, it is time to make an offer.

With the help of your legal team, negotiate the price with the owner. You may need to compromise but do not be afraid of standing firm if the seller makes suggestions you do not feel comfortable with. The British Business Bank has tips on negotiation here.

Once your offer has been accepted, you need to conduct due diligence and check that the claims of the seller are correct. This involves analysing all aspects of the business including speaking to customers, employees, suppliers and other relevant stakeholders.

Ideas to expand a business

For founders who have bought a business, there are also other ways you can grow your new venture.

Increase your sales

Growing your sales is a key way to expand a small business.

Look for new channels through which you can sell your products or services. This includes wholesalers, distributors and retailers.

If you have a product, you may want to consider selling via online marketplaces such as Amazon, Etsy, Folksy and Not On The High Street.

Marketplaces for services include Fiver, Upwork, PeoplePerHour and Freelancer.

Your business may be suited to delivering public sector contracts. You can find information about contracts worth over £12,000 using Contracts Finder, while contracts above £138,760 are listed on the Find a Tender service.

Look for ways to improve your marketing to reach new customers. Your options include public relations, social media and print advertising.

Improve customer loyalty

It can be more expensive to attract a new customer than keep an existing one, so building on your customer loyalty can be a powerful way to grow your business.

Look for ways to keep existing customers on board by using loyalty schemes. Provide incentives for them to make new purchases and show that you are thankful for their custom.

You could introduce a referral programme which rewards existing customers for recommending your business to a new one.

Launch overseas

Selling your products or services in other countries is another way to increase your sales.

Research the locations most suited to what you offer. Looking at where your competitors are trading is one way to do this. You can also use information on different markets provided by the Government, trade associations, the British Library’s Business & IP Centres and specialist export research companies.

Consider all the potential risks associated with international trade such as regulations, competition, transport costs and cultural differences.

You may need funding to launch overseas. Options include high street banks, specialist lenders and the Government’s UK Export Finance scheme.

Franchise your business

Franchising involves selling your business model to another party who replicates it with their business but using your brand. It can be a highly effective way to grow a company, but it isn’t for all businesses and involves a complex process.

Do your research by getting advice from organisations such as the British Franchise Association or accredited franchise consultants. Your accountant might also be able to help.

It can cost thousands of pounds to franchise a business so you might need funding. Speak to banks or specialist lenders.

How TaxAssist Accountants can help your business

TaxAssist Accountants can help you with the right advice to grow your business. While our expertise covers tax, accounting, bookkeeping and payroll, we can also connect you with other providers we work with.

Contact us to find out more about our services and to book a free video or face-to-face consultation.

Date published 31 Aug 2023

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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