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Buying, selling or thinking of setting up a business always do your research, known in the trade as due diligence.
The holy trinity of due diligence is always the customers, the company, and the management.
The fundamental question is there a demand for the service or product? Don’t base it just on hunches or observations. Who are already out there doing it? For very little money Companies House or try Company Check can be a great starting point, it’s amazing what information you can get, even for a small company.
Don’t forget pricing, premium products and services command premium pricing try and pull off anything less will fail. The adage is true “You can’t fool all the people all of the time”.
What is the USP (Unique Selling Proposition) why would somebody want to trade with this business? Recognise it, flaunt it.
The company has to be sound, fit for purpose. There has to be clarity on costs, know the suppliers. Is there sufficient support, think about staff, IP, premises and systems, benchmarking, QA?
Thirdly, the management, no man is an island. The most undervalued asset in any business is the staff. It is often unlikely a person holds all the skills to perform all roles and responsibilities. Identify the key skills and resource.
Whether you are buying selling or setting up a business it always takes longer than first estimates and you can’t forecast for all events.
Covering the bases these are some generic points to be going on with.
|Customer||1. Market Research|
|2. Customers’ Profile|
|3. Competitors’ Profile|
|4. Managing Market Risks|
|6. Promotion and Advertising|
|Company||A. Running the Business|
|2. Key Suppliers|
|4. Managing Operational Risks|
|5. Legal Requirements|
|1. Start-up / Selling Costs|
|2. Breakeven Analysis|
|3. Funding options and Tax incentives|
|4. Cash Flow Forecasting|
|5. 5 Year Plan|
|6. Profit & Loss Account|
|7. Balance Sheet|
|Management||1. Job descriptions|
As a general rule, you should keep your records for a minimum of six years. However,
if you are:
• an employer, you need to keep Pay As You Earn (PAYE) records for 3 years
(in addition to your current year)
• a contractor in the Construction Industry Scheme (CIS), you need to keep your CIS
records for 3 years (in addition to your current year)
• keeping records to complete a personal (non business) tax return, you only need to
keep them for 22 months from the end of the tax year to which they relate.
If you need to keep records for other reasons, for example the Companies’ Act
requires limited companies to keep specific records and you also use those records
for tax purposes, you need to be aware that there may be different time limits for
retaining them. Be careful not to destroy any records you also use for tax purposes
Niall O’Driscoll FMCA CGMA