After you have received so much knowledge from the Word of God, it is now time to ACT. It’s time to put your faith to work. Buying an existing business is a great way to become a business owner, but it’s not without its challenges. It needs to be planned properly and every step executed with due care to avoid any potential loss of resources.
In this guide we will cover the main steps that you need to take to successfully buy a business:
- Assess your level of preparedness
- Decide whether it will be an independent business or a franchise
- Research businesses that match your requirements
- Carry out due diligence
- Make an offer
- Organize purchase agreement
- Finance the transaction
1. Assess your level of preparedness
You need to fully understand if business ownership is right for you before you start searching for any business to buy. Make sure you understand entrepreneurship and what it takes to be an entrepreneur. Ask yourself whether you’re ready to be responsible for every decision on a daily basis and whether you have the time management skills and self-discipline. You also need to be willing to work hard and be prepared to do ‘unpaid’ work (i.e. to invest time in the future of the business). You also need be ready to wear many hats; from sales and customer service through to financial administration and people management.
It is also recommended that you consult with the mentorship unit of the EEP program to give you some guidance regarding entrepreneurship and your readiness.
2. Decide whether it will be an independent business or a franchise
Deciding which type of business is right for you is a personal decision that you have to make for yourself, depending upon your personality, preferences and financial situation. This also depends on your experience, availability of resources and support you can get to establish yourself in that specific industry.
There are generally two options available:
- Buy an independent business: A business that’s free from outside control. These are privately owned as opposed to publicly listed companies. One of the main benefits of purchasing an independent business is that you have greater control to take your business in the direction you choose you have the freedom to implement new ideas or to change your products and services based on your own personal interests or market conditions. You’re also not bound by specific catchment areas or terms and conditions, giving you greater flexibility to market your products to a broader audience.
- Buy a franchise: A business where franchisees (people like you) are granted the right to use the business name and practices of a franchisor (the owner of the business providing the product or service). Franchise owners enjoy the security that comes from belonging to a much larger
3. Search for the business that matches your requirements
Now that you know what you are looking for, start searching. The best place to look at is the internet but you can also check newspapers, attend seminars where such things are discussed, and also network with people who are already in the same industry you are interested so you can gain insight and learn about opportunities.
Below we have provided a list of business opportunities, it can assist you in your research but you are not limited to it. If you can’t find what you are looking for, keep researching in other platforms.
| Business | Location | Selling Price | Potential/Profit | Industry/Sector | Description |
|---|---|---|---|---|---|
| Franchise – InXpress | Opportunities available in South Africa and internationally. | R 250,000.00 | Available on request | Logistics | InXpress was founded in Manchester, UK in 1999 and was initially run from founder John Thompson’s bedroom. We are now a 400-franchise strong technology company specializing in logistics, that spans 14 countries, with over 30,000 customers. By working with potential franchise owners like you, we continue to grow and dominate our space in global logistics. |
| New Laundry Franchise opportunity | GAUTENG , MPUMALANGA OTHER AREAS | R 265,000.00 | R 13,482 | Laundries and Dry Cleaning | All Areas .Fast growing businesses. Have a shop developed near you. Well equipped. Laundry with quality equipment. Invaluable practical support and training . |
| Top Garden Service in Pinetown and Durban North | Pinetown, KwaZulu-Natal RSA, Pinetown and Durban North | R 380,000.00 | 51 % – on a monthly profit of R 16 000 | Garden Services and Nurseries | The owner has resided in the highway area for over 16 years and wants to downsize. All the equipment is in working order plus a COR for the included vehicle. Full portfolio of monthly serviced clients. The paperwork is up to date. Capable staff. |
| Garden Services and Tree Felling – Highway Area | Durban, KwaZulu-Natal RSA, Westville to Hillcrest | R 400,000.00 | 114 % – on a monthly profit of R 37 850 | Garden Services and Nurseries | A garden service which has operated under one owner for 20 years offering insurance, safe, tree felling and rubble removal. 56 gardens are serviced on a weekly or bi-weekly basis. Good staff and growth opportunities. Definitely a well-above-average business in this sector. |
| Tombstone outlets available nationally for franchisees | SA COUNTRYWIDE , NORTH WEST | R 550,000.00 | R 56,000 per month | Funeral Services | This well-established and fast-growing tombstone manufacturer is expanding nationally, with franchised shops available across cities and towns in South Africa. They have partnered with MyLife and now offer funeral policies and life insurance. They are the only tombstone company in South Africa who can offer credit through Mobicred. |
| Laundry and Hardware Outlet | Durban, KwaZulu-Natal RSA, Glenmore | R 750,000.00 | 48 % – on a monthly profit of R 30 000 | Laundries and Dry Cleaning | The laundromat was established 22 years ago and has evolved into its current form. It is run by 2 capable staff. The new premises is now becoming well established and its popularity is increasing. The hardware shop shares the same premises and rental. A further source of income is vehicle number plate production and there is a growing market with dry cleaning. There is the University and many schools that can be tapped for business. This definitely warrants a closer inspection. Figures are available/ |
| Highly profitable “formula based” broiler chicken production units | GAUTENG , MPUMALANGA OTHER AREAS | R 830,000.00 | R 104,021 per month | Farming | Key features of these turnkey “formula based” environmentally controlled broiler chicken production units: – Business in a box; – This operating model runs to a prescribed formula; – Strong cash at the end of every cycle (7 – 10 days, depending on model selected); – Only 2 staff members required; – High demand for broiler chickens; – State of the art environmentally controlled chicken houses; – Production is done using modern methods to control lightning, temperature and humidity; – Owner is not required to attend to daily operations; and – Various scenarios for 600/1000 and 1500 models based on cycle days 10/40, 9/36, 8/32 and 7/28. |
| Retail Shop- sterling silver jewelry & quality gifts – Outer West Mall Durban. | KWAZULU-NATAL , DURBAN | R 990,000.00 | R 47,457 | Retail | 2-corner glass shop ideally situated in a top Outer West Mall, close to a major upmarket retailer. Owner works Mon to Fri only. Steady turnovers & profits, since 1991. |
| Zebro’s Chicken Franchise | Opportunities available in South Africa | R 1,000,000.00 | Available on request | Fast food | The founder believed that the combination of his secret recipe and the traditional braai method would bring people together and since opening the first store in Caledon in 1998, Zebro’s have been serving its unique chicken meals to South Africans. |
| Fitment Centre Durban (non-franchise) | KWAZULU-NATAL , DURBAN | R 1,100,000.00 | R 39,937 per month | Automotive | Steady annual income that could be improved upon by giving this tired fitment center a quick makeover. Perfectly positioned on a major arterial road into Durban CBD. |
| Galito’s Chicken | Franchises available throughout South Africa. Looking for Multi Unit Operators. | R 1,200,000.00 (Starting from R1,2m – Different models available | Available on request | Eatery | Invest into a turnkey fracnhise solution that offers a product offering focused on Flame Grilled Piri-Piri Chicken prepared in a range of flavours and heat levels. Founded in the small town of Nelspruit, South Africa in 1996, Galito’s has been consistently expanding in the country as well as international markets. In those 26 years, our proudly South African brand has extended to more than 210 stores in 17 countries. It’s tried, trusted and ‘Tastes Like Home’. |
| Xpresso Coffee Franchise | Opportunities available in South Africa | R 1,250,000.00 | Available on request | Fast food | We offer more than a mere franchise opportunity. We present you with a premium investment platform to become part of South Africa’s fast-growing coffee industry. The industry is demanding branded lifestyle coffee destinations encompassed with great coffee. This is becoming a way of life for the number of growing coffee enthusiasts |
| Solar & Renewable Energy Business | KWAZULU-NATAL , NORTH COAST | R 1,500,000.00 | R 39,978 per month | Renewable Energy | Business has been in existence since 2006 servicing the area and community with renewable and solar energy. Business has been stable, offering a wide range of products giving the consumer solutions depending on solar energy rather than the high financial demands that Eskom requires. With the ever increasing price hikes this is a product that is always in demand and is increasing becoming an alternative to your everyday consumer. All systems in place and supplier relations healthy for anyone who wants to take opportunity of this well-established business. |
| Barcelos Flame Grilled Chicken Franchise | Opportunities available in South Africa | R 1,500,000.00 | Available on request | Fast food | Barcelos Flame Grilled Chicken opened its first store in Sunnyside Pretoria in 1993 and started franchising in 1998. The brand is known for quality chicken products and generous portions. A dedicated team is the driving force behind the operations of this franchise company. Complete operational and managerial training is part of the package and franchisees benefit from ongoing product and systems development. The current trend towards healthy living and the demand for affordable fast food is driving this successful recipe. |
| Well Established Furniture & Accessories Shop – KZN Inland | KWAZULU-NATAL , KWAZULU-NATAL MIDLANDS | R 2,500,000.00 | R 110,823 per month | Furniture Retail | PRICE REDUCED BY R500K – OWNER HAS EMIGRATED. Furniture & Accessories Shop – established 18 years and very profitable. Large customer base. Can be managed remotely with periodic visits. The Seller is already overseas and has requested that the selling Price be reduced for a quick sale. |
| Your complete bedroom, mattress and accessories retailer | R 2,515,335.00 | R 64,233 | Furniture Retail | The ultimate in bedding and bedroom furniture, providing solutions for individuals, hotels, interior decorators and contractors | |
| Locksmith in Northern KZN | KWAZULU-NATAL , NORTH COAST | R 2,690,000.00 | R 94,036 | Locksmith | This business was established in the 1980’s and still going strong, current owner is relocating. This is a great business opportunity that should not be missed. Staff well trained, solid client base in place supporting the business due to excellent service and quality product offerings. Business very well located in a prime spot. Currently business is owner run, but potential manager is in place. Seller owns the business building, will be available to potential buyer as an option. |
| Pre-school on the Dolphin Coast | KWAZULU-NATAL , NORTH COAST | R 3,200,000.00 | R 113,696 | Education | A profitable and popular early learning centre in one of the fastest growing areas in KZN |
| Manufacturer of solar panel mounting systems for PV solar installations | KWAZULU-NATAL , DURBAN | R 4,367,000.00 | R 180,404 per month | Manufacturing | The business manufactures solar panel mounting systems for PV solar installations |
| Franchise – ACDC Express | Opportunities available in South Africa and SADC countries | R 5,684,900.00 | Available on request | Retail | ACDC Express is an electrical retail franchise, specialising in everything electrical. Established in 2007, our core focus is to provide customers with quality electrical solutions. |
4. Carry out due diligence
Once you have identified the business you want to buy, you now need to examine it in detail to assess whether it’s a good investment.
So, you first contact the seller and express your interest in the business and request additional information. The information you should request includes the following:
- Financial Statements (Income statement, Balance Sheet, Asset registers including stock registers where applicable)
- Tax information (tax returns and payments)
- Legal information (Intellectual property, Trademarks, Registered patents, Existing contracts and contractual obligations with staff and third parties such as customers and suppliers, and any past, current or pending lawsuits)
When you get to this stage, you need to contact the EEP Consultancy team for assistance. The information you request must be reasonable and relevant to the business.
5. Make an offer
Based on the results of the due diligence process, you can now decide whether or not you want to continue to buy the business and how you are willing to pay for it. Once you decide on the price stick to it. However, the initial offer you will make to the seller should be a little bit lower than what you are willing to pay. This will give you a room for negotiation.
Learn negotiation skills and ask for assistance. If it’s a big deal, it is recommended that you seek help of a consultant or partner with someone who has experience in the field.
6. Organise purchase agreement
Once you have agreed on the price and you have decided you are going ahead with the deal. It is now time to structure the deal. Make sure it is clear and suitable for you. If the seller drafts the deal and send to you make sure you understand it and you agree with all the clauses. For the clauses you are not in agreement with, please make sure you request them to be reworded such that they make sense to you.
Make sure the agreement includes the following:
- The purchase price
- The payment method and payment terms
- The seller’s involvement after purchase
- A restraint of trade covenant
- Any other conditions that will protect you
7. Finance the transaction
How you are going to finance the transaction should be in the back of your mind before you even start the process. You should start discussing the deal with the potential funders the minute you agree in principle with the seller on the price of the purchase.
Funding could be equity (where you use your own money or some you know in return for shares) or debt (loan from the bank or other source). Start applying for funding and if the fist funder rejects it, move on to the next funder. Keep going, keep knocking till it is accepted. Your faith is also going to be tested in this step but you need to be confident and certain that you will receive funding.
NOW GET STARTED! All the best!