You have decided to buy a business but now you need to determine what type of business that you would like plus what cash do you need to purchase it, what is your expertise and what things should you budget for when you find the right business to buy.
First, you have to decide, do you want to manufacture a product, sell a product or service a product. What makes your product/service unique? Is your business different than other existing businesses currently in the industry? If your product/service is not unique, what will you to differentiate yourself from the other competitors. How will you get customers to come to you over your competitors? Will you offer a product warranty, a service warranty, something more than the others? Do you have any patents or trade secrets which give you an upper hand over your competitors?
How large is the market for your product or service? Will you aim to attract all customers to you or just a specific component of the overall market. Identify your strengths and weaknesses. Identify your competitors strengths and weaknesses and capitalize on those weaknesses of your competitors and ensure that your weaknesses are not the same as theirs. Hopefully, you can minimize your weaknesses. How will your competition react when you enter the marketplace? What price point are you going to come in, above, equal or below the competition? Is your product/service identical to the competition or have you made it slightly different? How will you be able to market your products/service?
Operating requirements – are both physical and capital. How large of a facility to you need, how important is size and location? Are there many such facilities available to rent or purchase? Why did you select this location, was it based on economics, emotions or logic? What are the operating costs and services needed, heat, hydro water and ensure you budget those costs into your cash flow. Budget your marketing costs into your cash flow requirements as well.