Almost taking the plunge into business.......

[PadThai]

Greetings from a newbie.

I have a successful career, am in my mid-forties, and am building up a tidy 'nest-egg' for the future.

Over the last few months I have been assessing an opportunity to purchase a small Limited Company that is trading successfully. It is an industry that I know well and I feel sure I could make a success of it.

However, I am completely new to the business world and my 'risk' is that I would need to use practically all of my life-savings to buy the business, and would probably need to look for some small investment as a top up.

The business would be essentially operated from a home office and will involve a lot of travelling.

I'm looking for advice on issues regarding taxation, using a home for business purposes, whether or not the business should own the property etc etc etc.

I wonder if there are any resources to help me get underway - or whether members may have contacts with reliable and experienced legal accountants whom I could engage with?

Thanks in advance for any help/advice offered. As I type this I wonder why I'd give up a well-paid career that is providing exceptionally well for my family's future, to take a 'risk'.......

 

[Scalloway]

Running a business from home - advice from the gov.uk website

https://www.gov.uk/run-business-from-home

 

[Nochexman]

Over the last few months I have been assessing an opportunity to purchase a small Limited Company that is trading successfully. It is an industry that I know well and I feel sure I could make a success of it.

However, I am completely new to the business world and my 'risk' is that I would need to use practically all of my life-savings to buy the business, and would probably need to look for some small investment as a top up.

Based on what you describe the biggest issue you face is whether what you are proposing to buy is worth what you are thinking of paying. How have you worked these things out?

 

[Mr D]

There can be more than one way to buy a business. Paying cash up front is one way, its not the only way.
Other methods include paying over time, including from the profit of the company.

Have a look around at what options there are, to be honest its a good idea to have some money held in the bank to cover poor decisions / good decisions / downturn / bills due / expanding.

 

[PadThai]

Thanks for the responses to date, much appreciated.

I'll take a look at that link and explore other financing options (I'm working on the assumption that using as much of my own cash as possible will automatically reduce complications....)

For information, the price of the business is simply 3 x last year's operating profit. This is a figure that has been maintained for the last 4 years. As this is essentially a 'sole trader' set up as a Ltd. Company, I'm guessing that the value of dividends paid out doesn't adjust that metric? There's little cash sitting in the business because of that.

 

[7Tom7]

Be careful that the person selling the business isn't going to take the best customers and start a new business.

I got quite far down the line in potentially purchasing an electrical contracting business as an add on to an existing business. For various reasons I pulled out, a year or so later I was talking to a supplier about the electrical contractor and was told the original owner had setup again and pinched the best customers and staff.

I think people often insist the seller works on for a day or two a week over 6 months to try and prevent this.