Many people dream of running their own business and sometimes you’ll be in a position to think about buying the business you work in.
There’s a whole raft of things to think about along the way but here are a few to consider.
If you are successful in buying the business, that’s just the start. What are you going to do with it, and do you have the skills, knowledge and experience to successfully run the business? One way to think about that is to write down all the functions, then assign names to them from your team. You might want to get the existing owner to do the same thing; there may be some surprises for you!
Do a SWOT analysis on your team; be prepared to hire the skills you don’t have in-house
As an employee, working for the owner, you have an established relationship. If you are going to make an approach to buy the business, you will change that relationship. There’s a risk that if you make an approach, and it does not work out (for whatever reason) you will not be able to continue in your role.
To minimise this risk, make the approach very carefully and be as subtle as you can. Be prepared to take your time and give the owner time to adapt to your suggestion.
Money matters. The chances are that you cannot pay as much for the business as a third party, with deeper pockets, can afford. Be open with the owner about your finances, and be prepared to go “all-in”. That may mean putting your house on the line, risking your pension…is your partner or family prepared to take the risk?
For the existing owner, there are a number of benefits to selling to the team and you’ll need to emphasise them. You probably cannot compete on price, so compete on the emotional appeal of looking after the business and the team. There’s also the avoidance of a protracted sale process involved in the sale to a trade buyer.
Get help early on to advise you; there may be more sources of funds available than you realise, and the conversations with the owner may be more fruitful if both sides can express opinions untainted by the (probably many years) experience of working together.