The Australian economy is currently thriving and that means one thing for entrepreneurs: the number of businesses that are worth investing in or even buying is considerable, with some of the most lucrative sectors being construction, healthcare, tourism, ecommerce, and energy. As noted by the Australian Small Business and Family Enterprise Ombudsman, however, around 97.3% of businesses in Australia are classified as “small businesses.” That is, they have fewer than 20 employees. Entrepreneurs wishing to expand their reach and forget into new territories can take advantage of attractive loans and incentives for business owners, while also ensuring that the wealth they have earned remains intact. If you are thinking of buying a business, the following considerations will help keep you on track.

Know Your Specialty

When purchasing a small business, it helps to be knowledgeable in the product or service you plan on taking over. For instance, you may have crunched numbers and noticed that the life and living insurance industry is on a high, with Ibis World reporting that alongside the financial sector, insurance services are the fastest-growing services. Before purchasing a business in this sector, ask yourself if the business’ product fit the target audience you with to serve. Think about how easily you can take over these services, and the likelihood that current customers will stick with you. Discover how many customer relationships are tied into specific agents, and the length of time it will take to build on established relationships between the former management and trusted clients.

Do Your Due Diligence

When thinking of purchasing a business, it is crucial that you conduct a full investigation of its history. Inform yourself regarding the firm’s financial and legal situations. Some of the most important factors to look out for include outstanding debts, issues with trade unions and employees, outstanding taxes, and other shareholders. As for finances, it is crucial to study the firm’s cash flow, considering revenue, profits, and losses. You should also research shareholders, carefully looking into what percentage of the business is owned by them and the value of said shares. Other important things to investigate include: payroll, VAT statements, amortisation processes, and projections for the future.

Inquire About Existing Employees 

The quality and quantity of existing staff is important for businesses wishing to prosper Efficient teams are those which produce greater output, even when they comprise fewer staff members. If goals, roles, and procedures are unclear, invest in training and clarify employees’ doubts. Consider ways to streamline ineffective procedures and ensure that your employees are aware of the company culture you wish to create. Implement a smart DEI policy, since research shows that diverse teams are more productive and efficient. 

Look into the Company's Reputation

A business’s reputation affects existing and potential customers, so make sure the company you are buying is renowned for professionalism and efficiency. Check customers’ reviews opinions on trusted sites like Yelp, Trustpilot, TripAdvisor, and Facebook. Conduct surveys for consumers, asking for feedback regarding the positive and negative aspects of the firm. Check out social media sites like Twitter, looking into negative mentions and the rapidity and efficiency of the firm’s response to customer complaints.

Buying an existing business is an excellent way to avail of others’ vision and hard work. However, as much as you inherit all the positive aspects of a business, you also inherit its reputation and flaws. Conduct thorough due diligence into your shortlist of potential businesses, choosing a business with streamlined processes, a seasoned staff, and an excellent reputation.