12 Simple Rules to Follow When Buying a Business in Thailand.

1. Always be prepared before buying any business.  You must first understand your skill set, strengths, weaknesses, access to resources, and sources of support in order to reduce your risk and help ensure your success.

2. Buy a business that has a tried and true market for its products and/or services, both today and tomorrow.  Understand the market and make sure that there is a high probability that the business’s customers will continue buying in the future.

3. Buy a business operating in an activity that you have or can gain experience in.  Buying a business in a operating in an activity you are unfamiliar with can work, however, it is much more likely you will enjoy running, and be successful in, a business that you have some prior knowledge about and a passion for.

4. Know your customers.  Hopefully, the existing customers of this business will become your customers when you take over the business, so knowing all you can about who they are and if they are likely to continue to do business with the company after you take over is very important.  To put it simply, customers bring sales and revenue to the business, so your profits are in their hands.  Get to know them.

5. Know your suppliers and service providers.  Each of your products likely comes, in one form or another, from other suppliers or service providers.  Knowing who they are, how they work, what your obligations are to them, and if the agreements the company currently has in place with are transferable to you is paramount to your success after a takeover.

6. Know your competitors.  In today’s business world, competition is fierce.  There is always a new business process, technology, or product/service offering to adopt.  Make sure you know who is doing what and what you should be doing to minimize any threats in order to keep or better your position in the market.

7. Get it in writing.  Often times an established business has many different agreements, obligations, and other contractual concerns that are based verbally or on a handshake.  Some of these include supplier agreements, leases, and employment contracts.  While handshakes and gentlemen’s agreements can be nice ways to do business, you as a new business buyer should attempt to get as much of these in writing as possible in order to ensure business continuity.

8. Know the real reason for sale.  Finding out the genuine motivation for the current owner to offer his business for sale can save you a lot of time and money.  You are much more likely to strike a very fair deal on a business acquisition if the seller is highly motivated due to personal or human situations than if they are just looking to “get the right price.”  Experience tells us that the “right price” rarely comes and we all have wasted our time on this business.

9. Know how the owner arrived at the price for the business. The valuation of a business is based on a number of factors with asset value and goodwill usually being the largest portions.  It is important for you to understand what values are placed on what and how you will realize a return on investment that is acceptable to you.

10. Understand the financial situation of the business you are buying.  Just because a business shows profit on paper does not mean that the owner has this cash in his pocket.  Some businesses require frequent reinvestment and/or large amounts of working capital to continue operating.  This means that while your profits may be working for you, you may not be able to enjoy them anytime you want.  Conversely, many times cash businesses show losses on paper but the business owner is able to enjoy the profits of his business in other ways (often times avoiding high taxes).  Understanding the financial position of the business, its capital requirements, and how you will make money from the business can help you plan ahead and know what to expect from your new venture.

11. Understand the Legalities of the business.  No matter what country our business activity you are thinking of investing in, there are specific rules and regulations that govern the different business operations.  There are licensing issues, employment regulations, and other laws to follow and as a business buyer, you must familiarize yourself with these in order to make sure everything is running as it should be.  Consult with your business advisor to get more information on specific laws and regulations in your area.

12. Don’t buy a business only for money, but buy a business you can enjoy and be proud of.  Unless you are a professional investor or seasoned business buyer, your decision to buy an existing business likely hinges as much on the change of lifestyle and enjoyment you desire as it does on the financial benefits being a business owner can bring.  Most successful businesses are run by owners who enjoy working in them…Make sure you will too?

As many of you have heard, owning your own business is potentially very rewarding, financially and otherwise.  Congratulations on your decision to be your own boss.  Remember, it is impossible to know everything about every business and it is highly recommended that you consult professional advisors to help you ensure your success.

For more information or to view business opportunities and Thailand's best businesses for sale, please visit www.elitebusinessthailand.com.