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Buying an Existing Business or Franchise

By: Rachel Newcombe - Updated: 22 Sep 2010 | comments*Discuss
 
Buying An Existing Business Or Franchise

If you’re keen to run a craft business, but are unsure as to whether to start one yourself, one equally good option is to buy an existing business or buy into a craft franchise.

Buying an Existing Business

Buying an existing business can be a good option, if you happen to come across one in your desired areas and it’s doing well. When you’re researching businesses that are for sale, it’s as important as ever to look into everything thoroughly. The owners who are selling it will inevitably paint a bright picture and focus on the benefits of the business, but there may well be hidden reasons involved in their decision to sell and you need to try and find out the truth before you commit to buy. Chatting to the current owners can highlight crucial information, but there are other avenues to explore too.

Reading through all the information they provide you with, should give important clues as to the strengths or weaknesses of the business. Most importantly, look carefully at the figures to see if they add up and check what the turnover and profit has been for the last few years.

Buying a copy of their records from Companies House may give additional clues, as could looking through newspaper archives for mentions of the business or searching the net for recommendations or reviews. If you discover it has a poor reputation, for example, you may need to think long and hard about whether you could improve it and want to take on that task.

It’s also definitely worth visiting the business – if public are allowed – on a number of occasions to gauge an idea of how many customers they have. If it’s not possible for you to do this, then a friend or partner could help suss it out for you, so you don’t get recognised. As with starting your own business, it’s also worth investigating all the key competitors in the area, seeing how they trade, what products or offers they run and try and gauge an idea of their popularity.

Whatever you do, don’t leap in head first without doing plenty of research first. Buying an existing crafts business can work out really well, but you need to assess whether it’s the right move, or not, for you, both practically, financially and on a long-term business basis.

Buying a Craft Franchise

Another option that’s definitely worth considering, especially if you’ve never run or owned a business before, is to buy into an existing craft franchise.

There are a variety of franchises in existence in the UK, with many focusing on crafts. They can involve selling products, but also running craft events, classes and parties. One of the major positives about buying a franchise is that you usually get lots of help and advice thrown in, which is ideal for novices, and that you’re buying into a name that may already have some degree of recognition in your area.

When you buy a franchise business, you pay an initial fee and usually buy the franchise for a set period of time, renewable if things go well. When your business is up and running, the franchiser should provide continual advice and help and be involved in advertising and marketing your company name, products or services. You run it just as you would your own business and, as it’s hopefully a tried and tested format, you have fewer risks than if you’re starting up completely on your own.

On the downside, as you’re part of a larger franchise, you’re expected to conform to the business practices, interests and format of the group – which may mean doing things you don’t necessarily agree with. The franchiser also has the right to request that you forward sales figures and statistics, which can seem a bit demanding sometimes. If you decide you want to sell before the end of your contract, the franchiser has to agree.

Again, before committing to run a franchise, research it very thoroughly. Speak to others doing the same thing, check the background of the franchise company, do the figures and work out the costs, and double-check that it’s a viable business. A second opinion is valuable and an accountant or solicitor could help with this.

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