Procuring Small Business Can Promise Success Too
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The prominence of startups in the ecosystem has precipitated a misconception. It is vastly reckoned that success can be achieved through a disruptive business idea only. This approach is partially wrong as the success is not merely contingent on a disruptive business idea but on other co-relating strands as well. Nonetheless, the significance of disruptive ideas can’t be underestimated.
Learn A Lesson From ‘Oracle Of Omaha'
Warren Buffett, who is a renowned American business dignitary, has a profound self-theory of investment. He invariably emphasises on buying stocks of a solid company who is performing moderately in the market. He reckons that the investment should not be made by solely assessing the current position of the company. Other than current performance, the investor should assess the trajectory of the organization as well.
The educative advice of Warren Buffett is, “ If we're (Buffett and Charlie Munger) right about a business, if we think a business is attractive, it would be very foolish for us to not take action on that because we thought something about what the market was going to do or anything of that sort....Because we just don't know. And to give up something that you do know and that is profitable for something that you don't know and won't know because of that, it just doesn't make any sense to us, and it doesn't really make any difference to us.” said in an annual meeting.
The realistic experience of Buffett demystifies that integration holds more power than creation. Creating a new company requires twofold hard work and monetary expenses whilst acquiring the existing business needs minimal manual labour and fiscal support.
Attaining Success From Acquired Business Enterprises
Success is an ordinary aspiration of every entrepreneur. Nevertheless, it is not relatable to startups only; it can be achieved by the acquisition of failed ventures also. Even, Colonel Harland Sanders, founder of KFC, attained success following numerous business failures. In fact, KFC was not the first business of Sanders; he ran various small businesses and further, performed small jobs for a living. However, no endeavours helped him realize his ambitions as good as KFC did. Sanders culinary skills helped him establish KFC and after attaining a huge success in terms of revenue, he sold off the business to a group of investors.
The sale turned profitable for Sanders as the new investors increased KFC outlets to 6000 and then gained $2 billion yearly. So, Colonel Harland Sanders’s story is exemplary that the acquired business can also promise success to the investors.
Taking over a small business demands evaluation, research and in-grown interest. Trusting on a broker is not good as mediators invariably represent a good image of “small business for sale”. For gauging the existing business, you need to adhere to certain parameters, in turn, help you ascertain inner picture of the small business.
1. Research Well
If a business is available in cheap rates then acquiring the business is recommendable. The investment should not be subjugated on attractive rates but on the hidden potential in the business. Assessing the performance of the small business, reasons for the business failure and importantly, recognizing endeavour’s cruxes is imperative.
The evaluation can be possible by knowing the nitty-gritty of the industry, the small business belongs to. Further, conversations with leading industrialists of the particular sector help to gain implicit knowledge about its ecosystem.
2. Ascertain A Good Match
After grasping the knowledge about the sector, it’s time to find a good match in accord with your needs. A good match will be something that builds your interest, keep you engaged and has a component to thrust you high in the industry.
While planning to take over the company of your choice, involve accountants and advisers so that the business valuation can be accurate.
3. Perform A Double Check
Once you have made a decision of acquiring the business, it is imperative to contemplate a bit more. For that, become reliant on outsiders and enquire financial soundness in the business model. Auditors, the Income-tax department and judiciary are a few mediums to cross-check the background of the company.
Follow these suggestions while ascertaining as well as acquiring existing businesses.
This article was originally published by Jaspreet Kaur.