Quite commonly, business owners feel that their business is unique, but is it really? There are a variety of different ways that businesses can be unique. Yet, there are some key variables and factors that simply must be in place if a business is to be simultaneously unique and valuable. This leads us to an important question, are these unique and valuable factors transferable to a new owner?
Here are five key factors to look for in a business.
Factor One-The Assets
Having an intangible asset, such as the perfect location with a locked in long-term lease (which would, of course, transfer to a new owner) is of vital importance. However, this is not the only example of critical intangible assets. Other examples would include a robust mailing list of past and current clients that was built up over a series of years, a popular franchise relationship, trademarks and copyrights or a respected and known product line.
Factor Two-Is the Business Easily Replicated?
If a business is easily replicated, then it can fall prey to knockoff artists. One example would be the fact that franchises often, but not always, limit the number of franchises in a given geographical area. Another example would be whether or not a business has a liquor license, since most jurisdictions have limiting factors on the number of liquor licenses available.
Factor Three-What is Proprietary?
Proprietary technology, services or products are, simply stated, always a good thing to see when you are considering a business and evaluating how unique and valuable it may be. Attractive factors would include buying a business that has developed unique technology, such as software, or a process that is patented or extremely difficult to reproduce.
Is reputation everything? In business the answer is, “yes!” Reputation matters a great deal, and having a business that possesses a great reputation in a given community can mean money in the bank. A good example would be a pharmacy that is well known for its ability to deliver prescriptions in a timely fashion, or perhaps it is the local hardware store that always has “everything you need” in stock and ready to go. Just remember it will be up to you as the new owner to keep up a good reputation as you progress into the future.
When you are considering a business to buy, it is necessary to go beyond the simple numbers and dive deeper. This means accessing a business to determine what makes it unique, how robust it is likely to be to challengers and what characteristics it has that could help ensure its long-term survival.