When considering purchasing a business for sale, fundamentally, you are looking for a profitable business, one that can maintain its performance under your ownership or one that can quickly become profitable. So, how do you identify a profitable business for sale?
Before delving into the financial records, you can look for a couple of basic signs of a successful business. Happy staff and satisfied customers are a great sign that the company is in a good state of health. If the company in question scores highly here, it makes sense to take a closer look.
A business with a thorough plan, one that maps out a clear strategy for growth, is an excellent indication that the company rests on solid foundations. Runaway growth will put any business under significant financial pressure, will require a substantial injection of capital and harm profitability.
Sales are another measure by which you can assess a business. Remember, however, sales records alone won’t paint a complete picture. And of course, your ownership and skill set can have a dramatic influence on how the business performs from a sales perspective. Good sales indicate that customers respond well to the product or service and, this is another good find in your assessment of whether this is, or could be, a profitable business.
Ultimately, however, a profitable business will be in a state of good financial health. A profitable business will have substantial funds to cover both operating expenses (salaries, rent, insurance, etc.) and capital expenditure (plant, equipment, vehicles, etc.). A profitable business will also have good margins.
As with sales performance, your ownership could have a positive influence on the financial state of the business. You may be able to inject a significant amount of capital into the business or see how to the right any financial woes. Despite your talents or assets, there must be some good foundations in place.
How a LINK Business Broker Can Help You to Identify a Profitable Business for Sale
All LINK brokers receive rigorous, industry-leading training. You get sound, smart advice, supported by real-world experience and the highest professional standards. A LINK broker can help you to analyse all aspect of a business’ performance and determine if it is a good fit for you.
Choosing a LINK broker who specialises in the industry of your potential new business, will deliver a further advantage. Industry-specific knowledge will help your broker to measure the company against others in its sector, giving you a clear idea of how it performs according to the standard. LINK have been connecting business buyers and sellers since 1996.
When you choose LINK, you choose proven processes and compelling results. Let us help you to identify a profitable business for sale and do what it takes to make it yours.