Buying a business

Buying an existing business? You may find many advantages – being already established, it will have existing customers and suppliers.

But not all businesses for sale are good investments. If you’re considering buying a business you should thoroughly investigate its value, current condition and future potential, and decide if you’re ready to run the business.
 
You should consider seeking advice from a financial advisor, accountant or lawyer before making any offers or signing any contracts.

Some common advantages and disadvantages to buying your own business.

Advantages Disadvantages
Initial ground work is complete May need costly improvements
Customers are established and known May need to honour existing contracts
Financial history and revenues are known Current staff may need to adjust to change
Existing staff are experienced Seller’s relationships may be a success factor

Quick guide to buying a business


 
  • Find businesses for sale

    If you're looking to buy a business, there are various ways to find businesses for sale, such as:
    • newspapers and commercial websites
    • business brokers and real estate agents
    • trade journals and industry magazines
    • your accountant, who may have clients looking to sell.
  • Investigate the business

    When deciding if you want to buy a business, you should start by exploring the business sector so you know the risks, trends and market conditions. There may be aspects of running a business in a particular industry that you hadn’t thought of.

    When you’ve found a business that you’re interested in buying, you should conduct due diligence.

    Due diligence involves assessing the value of a business and the risks associated with buying it. It is usually conducted after the buyer and seller have agreed to a deal in principle, but before a binding contract is signed.

    During the process, you should consult an advisor, such as a lawyer or accountant, to help you examine key aspects about the business and its sale, including:
    • legal implications and tax considerations
    • asking price and valuation
    • financial records and accounts receivable
    • sales, expenses, debts, and profit margins
    • warrantees and refund commitments
    • business assets, equipment, and stock.

    Don't forget to check your licencing obligations

    Many business licences are issued to the business owner, not the business itself. This means that if you are purchasing an existing business you may need to apply for a range of licences to ensure you comply with regulatory requirements.

    The Australian Business Licence and Information Service (ABLIS) can help you identify the national, state, local and industry-specific licences, permits, approval, regulations and codes of practices you need to consider in your business.

    It is also recommended that you contact key service providers such as utility providers (SA Water, SA Power Networks, etc.) to investigate your licencing obligations relating to the use of their services.
  • Make an offer

    Negotiating the purchase of a business starts when you make an offer.

    This may be followed by the seller's counter offer, and any negotiating required to reach an agreement.

    You should:

    • decide your purchase price limit beforehand
    • remain objective throughout the process
    • consider getting professional support in the negotiation process


    You may have other conditions that affect your decision, such as the timing of settlement. You’ll need to weigh them up along with price in your negotiations.

  • Prepare a contract

    When you have agreed on a price and what it covers, you should have a written legal contract prepared that sets out what each party is agreeing to provide, in what timeframe, for what amount, and for what method of payment.

    The contract may also include details about the seller’s involvement after purchase, any restraint of trade to prevent the seller opening a competing business, arrangements for current employees, and any other conditions of sale to protect you and limit your risks.

    You should always seek professional legal advice before signing a contract.

Planning templates

Use these free planning templates and guides to help you better plan, prepare, manage, and exit a business. Investing time into proper research and planning can help turn your ideas into reality, and prepare you for what’s to come.

Business plan

A business plan works as a guide when your business is operating; how you operate, planning the future and preparing for risks. It is also often a required document for finance applications.

Marketing plan

An effective marketing plan highlights what you are marketing (your product or service), who you market to, how you market to them and how to determine success or identify improvements.

Emergency plan

Your business is critical to your financial wellbeing, so you’ll want to protect it as much as you can against emergencies and disasters.

Succession plan

Planning for the day you leave your business is a valuable investment.

Our friendly team is here to help

If you need any assistance, please call 1300 142 820 for information relating to small business or visit our contact page for more information.