Industry sector: Retail and wholesale

Antique dealer: Buy an existing business

You might decide to buy an existing antiques business rather than start your own venture from scratch. Buying a going concern can mean that:

  • the premises, equipment and stock may already be in place
  • there are established customers
  • the business can generate income immediately
  • suppliers and trade contacts may have been identified and relationships established with them
  • the business has a track record which can help if you are looking for finance
  • staff may already be in place

However, look critically at any business that you are interested in to make sure that the price you negotiate with the seller is a fair one. Try to establish why the business is for sale - for example, is the owner keen to retire or is there another personal reason for selling up? Businesses like antique shops are popular with 'downshifters' - perhaps the current owner has decided that they made the wrong decision and wants to change career again.

Your market research into the industry as a whole and the locality in particular will help you to establish whether or not the owner is selling because he or she can no longer generate enough income from the business. This may not necessarily deter you - many business people are confident that they can turn a failing business around. The important thing is to have established the current position so that the price you pay for the business is not too high.

Other matters to consider include:

  • the state of the premises, equipment and so on. Will you have to spend money refurbishing or replacing assets
  • the condition, provenance and value of any stock you are buying. Check this over carefully before agreeing a price
  • the reputation of the business - ideally it will have established a reputation for quality, fair dealing and openness, and for reliably sourcing and stocking interesting items
  • existing staff rights
  • how to retain key personnel once you've taken over
  • does the business owe money that you will be responsible for
  • if you are paying for goodwill, to what extent does this depend on the skills, contacts and personality of the seller

If you are purchasing any stock, make sure that the seller has good title to it. Be sure to check whether there are any unresolved disputes over ownership of an item of value.

Ask your accountant to look critically at the business accounts for the past three years and discuss with him or her the selling price in the light of what the accounts reveal. Make sure you budget for other professional fees such as legal fees and valuation and survey costs.