There is no doubt that buying an existing small business in UAE is less risky than starting from scratch. You can easily find a business for sale in Dubai, but there’s still a risk. Before buying a business in Dubai, you should protect yourself against the risk-taking factors. These factors can be avoided by understanding the financial state of the business that you are planning to buy.
Let us guide you step by step towards your new business:
Step 1: First Determine you are interested in buying the business or not:
Before you move on with any official negotiation ask yourself is buying a business a good fit for you?
If yes then this is a time where you should discover important details about the business you are planning to buy. Dubai is full of readymade business options, be cautious while choosing the one. After choosing the business according to your interest try to fetch important details about the same, like how the business was started and what expertise is needed to operate the business going forward.
Before moving to the next step make sure you get answers to these questions from your seller:
- You should know about the asking price of the business you are planning to buy
- Get knowledge about assets that are included in the asking price
- Make sure to know about the availability of seller financing
Step 2: Know the history of the business you are planning to buy:
After getting sure about the business which you want to buy, try to evaluate its history. Whenever you buy an existing business in Dubai and look at its records, you are looking at the past. Don’t rely on “just hard data “try to fetch history of the business which you are planning to buy. Go to the library and skim the local Newspapers of Dubai to see the active rate of the business which you are planning to buy. Watch out is there any negative publicity?
It may sound time-consuming, but it can save you from making a deal you will live to regret.
Step 3: Know the Annual Gross Revenue of the business you are planning to buy in Dubai:
After you are aware of the history of the business, try to figure out the Annual gross revenue of the business. Most of the time people sell their business when it is in a loss. Make sure your business is not in Debits.
Step 4: Know why Business is for Sale:
There can be many reasons a business owner might put their business up for sale. If you’re buying an existing business in Dubai, you’ll want to know exactly why this business is not working anymore for its current owner. Ask him what challenges he has faced, what he has done to come up against those challenges, what attempts he has made to solve problems and how those attempts fared. While asking these questions to the current owner, you should also ask yourself, “Do I have the time, energy money, experience, and skills to meet these challenges with different or better solutions?”
Step 5: Know the goodwill of the business which you are planning to buy:
Goodwill is an intangible but saleable asset and before buying a business in Dubai be sure about the existing goodwill of the business which you are planning to buy. In most owner-managed businesses, Goodwill is usually attributable almost entirely to those owners through their personal contacts with suppliers, customers, and stakeholders. It becomes a bit difficult to transfer that goodwill to the new owner.
Step 6: Know what customers have to say:
A step that many business buyers usually fail to take is talking to current customers in the business, and not necessarily the ones that the seller handpicks for you. “Unless you know who buys from you and why they buy from you, you will be flying blind. “When you know your costumes well, you know how to meet their needs better than any of your competitors.
Step 7: Know your competition:
If you are planning to revamp an old /existing business in Dubai, knowing what your competitors are up to can help you in giving a new face to the current business. Knowing your competition will help you to specify your competitive advantages. Get Clarity on who your competitors really are, design your communication plan accordingly to maximize your advantage.
Step 8: Gather all the necessary documents:
Dubai always welcomes foreign investments greatly with the most liberal restrictions; government over there can help you in getting your business documents without any hassle. After you are done with the above steps, it is time to work with the seller now, to see important financial documents for the business. This due diligence before you buy the business will help you to confirm whether the business is worth it or not what you will potentially pay for it. This will also help you to find any red flags that may exist.
Step 9: Always have your exit strategy:
If you plan to outlast your competitors, it is better to prepare an exit strategy. Always carry exit strategy in your business plan, as you never know what your future can be.