If you have always wanted to be an entrepreneur, there has never been a better time to buy an existing business. Just one look at a “Businesses for Sale by Owner” directory and you will see how many businesses are available at rock-bottom prices. But don’t be too quick to make a decision. Often there is a good reason why the current business owner is selling. Perhaps they didn’t have enough working capital, or they failed to recognize key industry trends in time to stay ahead of the competition.
Remember the old adage: “Business owners never plan to fail; they simply fail to plan”? If you are looking at buying an existing business as an investment, chances are you will need to come up with a better business plan than the previous owner had; one that positions the business for short and long term growth. You must have a business plan completed if one of your goals is bank financing. An idea without a strong business plan has little chance of getting an investment.
Whether you have written dozens of business plans before, or if this is your first one, avoid these common mistakes:
Too many business owners only write a plan for their business when they are forced to do so by a financial institution. Don’t put off writing a business plan. As a business owner, you will always be “too busy” to do it.
2. Misunderstanding cash flow
Being too casual about cash flow can quickly cause a business to become insolvent. Use a cash flow table regularly and do your best to understand your cash flow thoroughly.
3. Adopting a “one size fits all” mentality
Your business plan should reflect your unique ideas for the new business, so resist the temptation to copy the ideas you find in other business plans. Include action plans, marketing plans, financial plans, and anything else that will help you run the business better.
4. Dreading the plan
Creating a business plan is never as hard as you think it will be. You can find the help you need from small business development centres, how-to books, software programs and mentors. Remember, when you buy an existing business, the plan is there to guide you and make you more successful.
5. Ask yourself questions
They will help you form your business plan. How will my background benefit the business? How is the business set up to work? What are my total expenses to operate this business? How much business can I do or sell? How am I going to finance this business, personal or bank? If you need financing for the business, what amount and for what purpose? Who are my customers and how can I increase the customer base? These questions will help you get started.
You will find a lot of advice about creating a business plan online in a Business FSBO Directory, where business buyers and sellers come to exchange ideas, opportunities and advice.