What costs should you prepare for when buying a business?

Budgeting SmallIf you are thinking of buying a business, you are probably wondering what costs you will need to prepare for. Here is a list of some expenses and other outgoings that are commonly encountered:

  • Accounting fees – you will want your accountant to review the financials, conduct due-diligence, ¬†provide advice on business value, help with cash flow forecasting, help set up your new computer accounting system etc.
          • Legal fees – you are advised to use a solicitor to review the ‘business for sale’ contract. You may also need to the solicitor to review a premises lease, franchise agreement and any other legal documents entered into.
          • Finance related fees – including any finance application fees and other fees.
        • Property lease bond
        • First month’s rent in advance
        • Franchise fee (if applicable)
        • Utilities deposits and connection fees – for water, electricity, phone, gas etc.
        • If you are selling goods on credit, you will need working capital to cover all expenses until the sales receivables start coming in.
        • Cash to fund any initial marketing push

If you are planning to move the business, you will need to prepare for relocation expenses. You will also need to factor in the costs of getting equipment reconnected and set up ready for use.
Contingency funds for any unexpected expenses and events.

Each business sale/purchase is different. As such, the above list is indicative only. For further advice on buying a business, view our business purchase process page




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