5 Ways to Find Legitimate Business Opportunities

Entrepreneurship is every working professional’s dream career progression. It gives them the flexibility to make significant decisions and the authority to call the shots.With an existing business opportunity, an aspiring entrepreneur can do away with the arduous setting-up process and take a giant leap. However, finding the best business for sale in Australia can be tricky as many sellers present misleading facts to tidy up a messy opportunity.

Scammers can take advantage of first-time buyers and take them for a ride. Thus, it is extremely significant to find a legitimate business opportunity that does not swindle the buyer. So here are five ways of finding a credible venture from a sea of listings available online.

1. Identify the Intent of the Seller

It is a myth that business owners sell their business when it is failing. There can be various reasons for selling a business, such as poor health, immigration, lifestyle change, family pressure, retirement, etc. Thus, instead of making assumptions about the intention of the seller, you must ask them directly about the reason for the sale. It must be convincing, and they must offer some proof for the same. For example, if the seller is migrating, he must inform you about the date of travel, new address, etc.

The motive should be genuine and not made up to cover the dwindling financial health of the company. Find out all the information about the business starting from its origin to growth in the industry. Enquire about the management, founders, stakeholders, customer base, number of employees, etc. If it appears too good to be true, dig deeper to check for hidden debts, disgruntled employees, litigations, tax frauds, etc. It cannot tick all the right columns, so be wary of a business pitch that paints an unparalleled picture.

2. Look at the Online Reputation of the Business

Before you sign the non-disclosure agreement and hire an accountant to look through the financials, you need to find out about the positioning of the business. The internet is the best place to get started. Browse through the website of the company and gather all the significant information about the products, services, history, contact details, privacy policy, terms and conditions, etc. Log on to the social media pages and check the number of followers and type of customer engagement being used by the business.

The next step is to read all the user-generated content about the brand on the internet. Take a look at the customer reviews and ratings and online discussions that may be related to dissatisfaction or appreciation of the products. It will also help you to understand the extent of marketing and brand awareness in the market. If it is a small business, you must check out the local marketing techniques utilised by the entity to acquire customers. Every business will have some disappointed customers as you cannot make everyone happy. However, if customer dissatisfaction is the prevailing sentiment, you must walk away from the deal.

3. Complete the Due Diligence Process

Due diligence involves an extensive and exhaustive research of the business for sale. It includes a thorough and precise evaluation of the financial health of the company, its assets, liabilities, cash flow, suppliers, customers, market size, profits, etc. Every aspect needs to be analysed closely, including the business registration number, legal documents, agreements and much more. You can hire an accountant to help you with the assessment of financials and find out the net profit margin, gross profit margin, running expenses, profit per customer, existing projects, long-term contracts, and deals in the pipeline.

While examining the financial data, ask for the balance sheet, cash flow statement, profit and loss statement for the past three years to calculate the financial standing of the entity. The owner should share information about tax reports, insurance, loans, working capital, licenses, permits, intellectual property, business plan, office lease, etc. The credit history and the sales patterns will help you deduce the stability of the venture, and its current revenue percentage will aid in identifying its potential.

4. Speak to the Staff and Suppliers

You can determine the legitimacy of the business by talking to the people associated with it internally. The existing staff is the best place to begin your investigation. Visit the office and talk to the employees and assess their satisfaction levels. Understand the working mechanism of the organisation and the productivity levels of the teams. Gain insight into the short-term and long-term goals of the workforce and how they are aligned with the business objectives. Find out about the delegation of responsibilities and transparency in the company. Also, determine if the employees will be willing to stay under the new owner or making a switch before the handover.

Similarly, you can talk to the suppliers and vendors. Find out how many of them are still doing business with the company and how has their relationship developed over the years. Check if there are any outstanding bills or debts that have not been shared by the outgoing business owner.

5, Market Research to Understand Potential

Every buyer needs to conduct market research before buying a business. You must do it to find out the demand for the products offered by the organisation. Determine the competitors of the company and how they are faring in the market. Analyse the marketing strategies utilised by the competitors and their customer satisfaction levels. Ascertain their unique selling proposition and how the business you intend to buy is distinguished from them.

You need to consider the economy of the country when making the decision. If you feel the product being sold by the entity will be no longer in demand during a downturn or will become obsolete because of technological advancements, you need to think again. In addition, calculate the exact amount that will be needed to run the business successfully while bearing all the costs and outgoings. A few impediments in the path should not deter your confidence. As a budding entrepreneur, you must be ready to tackle all the challenges.

Conclusion

If you are looking for a business for sale in Australia, you need to be careful about the entity you choose. Do not go by the fancy details provided by the seller. Keep the points mentioned above in mind to check the legitimacy of the opportunity and make an informed decision.