1. Know Your Budget
Before starting your business buying journey, understanding your budget is essential. How much are you willing and capable to spend on this venture? Determining your budget provides boundaries that help filter out irrelevant options, helping you to focus on what’s achievable. Financial resources such as MoneySmart by the Australian Securities & Investments Commission (ASIC) can assist in budget planning https://moneysmart.gov.au/budgeting
Find more information about the costs involved in buying a business and how to work out your budget here:
2. Check Your Finance Requirements
Next, identify your borrowing capacity. One popular approach is to speak to a lender or a financial advisor. This provides an overview of your financial capacity, ensuring you’re not biting off more than you can chew. Companies like Aussie Home Loans https://www.aussie.com.au/home-loans.html can help you understand your borrowing potential.
Find a list of finance brokers that GSE work with here: https://www.gsehospitalitybrokers.com.au/partners/
3. Concept and Preferred Location
Identify your preferred business model – would you prefer a day trade cafe, a restaurant, or a bar? Are you equipped to handle a liquor license? Would you need a grease trap or a commercial kitchen? Also, consider your preferred location, the Australian Bureau of Statistics https://www.abs.gov.au/ provides useful demographic data that can guide you.
4. Make an Inquiry
Once you’ve identified a potential business, contact the listing broker for initial inquiries. Websites like GSE Hospitality Brokers can connect you with specialist brokers across Australia.
5. Confidentiality Agreement or Non-Disclosure Agreement
This step involves ensuring privacy for all parties involved. As per business selling etiquette, it is required to complete and return a Confidentiality Agreement or Non-Disclosure Agreement.
You will find the GSE Confidentiality Agreement Here:
https://www.gsehospitalitybrokers.com.au/confidentiality-agreement/
6. Contact the Broker
After expressing your interest, expect a call from the broker to discuss further details. Remember, building a good relationship with your broker is invaluable when buying a business.
How to get in touch with us https://www.gsehospitalitybrokers.com.au/about-us/
7. Receive the Information Memorandum (IM)
The IM provides detailed information about the business you’re interested in buying. Review this thoroughly to gain in-depth knowledge about the venue.
8. Review the IM and Visit the Business
After reviewing the Information Memorandum (IM), visiting the business as a regular customer provides invaluable first-hand experience of its operations and customer experience. Observing the staff, service quality, and ambience without revealing your intentions ensures an authentic understanding of the business. This approach allows you to make more informed decisions about whether or not you will proceed.
9. Follow Up
Expect a call from the broker for feedback. The seller values your opinions and a genuine, honest response is always appreciated.
10. Arrange an Inspection
Organise a private inspection with the broker and the business owner. Discuss operational details and any potential issues.
11. Negotiate Terms
Now it’s time to negotiate deal terms and make an offer. This demonstrates your serious intent to buy the business.
12. Offer Accepted or Letter of Intent
If your offer is accepted, a Letter of Intent (LOI) is issued outlining the agreed terms and next steps.
13. Due Diligence and Heads of Agreement
The Due Diligence period exclusively allows you to validate and verify the business. The Heads of Agreement, though non-binding, is a sale summary used to prepare the contract.
14. Solicitor Consultation
Have your solicitor review the draft contract, and advise them on your intent to buy the business. The Law Society of NSW https://www.lawsociety.com.au/ can connect you with a solicitor.
The solicitors that we work with can be found here: https://www.gsehospitalitybrokers.com.au/partners/
15. Landlord Application
Prepare your application for the landlord. This step is crucial for avoiding potential hurdles.
Find more information about the lease assignment process here:
https://www.gsehospitalitybrokers.com.au/be-prepared-for-the-lease-assignment-process/
If you would like some help preparing a Business Plan, we recommend The Launch Crew
https://www.thelaunchcrew.co/business-plans/business-plan-sydney
16. Contract Exchange and Landlord Approval
After exchanging contracts with the owner, your broker introduces you to the landlord for approval.
17. Training Period
Once the landlord approves, a handover and training period with the business owner commences.
18. Settlement and Handover
Finally, after legal settlement and stocktake, the business is yours.
Congratulations on becoming a new business owner!
