Industry sector: Consumer services

Burglar alarm fitter: Buy an existing business


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

  • there are established customers
  • the business can generate income immediately
  • suppliers have been identified and relationships established with them
  • the business has a track record, which can help if you are looking for finance
  • additional staff are already in place (depending on the size of the business)
  • there are premises, business equipment, vehicles and shop fittings already in place (depending on the nature of the business)
  • the business website has already been set up

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.

Your market research into the sector 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 any premises, fittings, equipment and so on. Will you have to spend money refurbishing or replacing assets
  • the condition and value of any tools and materials you are buying. Check this over carefully before agreeing a price
  • is the existing owner prepared to give you some training after you take over
  • whether the vendor intends to keep on trading in the same area under a different name. If this is the case it is quite likely that some - or even all - of the existing customer base will migrate with them
  • 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 and personality of the seller

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.