Buying a Business?

Korero (AEWS), Volume 2, Issue 8, 24 April 1944, Page 22

Buying a Business?

A KORERO Report

Ex private jones had been waiting for that advertisement. Over in Necal, whenever half a dozen of them had been working over that inexhaustible topic, “ What I’m going to do after the war, ” Jones had been quite definite. For four years he’d been mucked about by other people. When he got back he’d buy a tidy little business —milk bar and confectionery and be his own master. Perhaps he wouldn’t get rich, but at least he would live his own life.

Ex Private Jones was told he would have to move fast. Mr. Johnston, vendor, wanted nothing better than to quit his business to a serviceman, but he was beseiged with buyers. That was only natural, because this was the sort of chance that came once in a lifetime. Why, last year he had netted . . . Ex Private Jones thought of all the other ex privates who would be looking for tidy little businesses, lumped together his savings, sold the section he had been thinking of building on, and inside a week emerged from a lawyer’s office an independent capitalist. A rehabilitation officer and an accountant friend urged him to wait a little and make inquiries. But ex Private Jones had been waiting for four years already.

Ex Private Jones has now much useful business knowledge. He knows that when a man sells a business on the open market he has a good reason to sell. He knows that when a man is in a hurry to sell he has a reason for his hurry. He knows that sometimes

suburban milk bars do clear £2O a week—but not by selling ice-creams and sticks of chocolate. Ex Private Jones paid £250 and a year of his life to learn these things— are not useful to him because he quit the milk-bar and confectionery business last week and has no wish to get back. Ex Private Jones need not have paid and a year of his life for this knowledge. He could have had it all for a few days of waiting and a payment of two or three guineas to a good accountant. And if he had gone about things in this way the chances are that he would still be selling ice-creams and sticks of chocolate and making a fair living out of it. As it is he is a man with a grievance — a grievance against the business world, against the rehabilitation people, and against his country. The only person he doesn’t blame for his misfortunes is the real culprit himself.

Perhaps you have the same ambitions as ex Private Jones. After four years of having your life arranged for you by other people, you want nothing better than to start life again as your master in your own business. There is no difficulty about starting. Small businesses come on to the market every day and any one who has saved or can borrow a few hundred pounds can buy one. But before you act think about ex Private Jones and ask yourself some questions. Ask yourself why so many small businesses do come on to the market. The answer is that small businesses seem an easy way of making a living to

people with little business experience or ability. No training is required and not much capital. Many of these people find after a few months that the life is unattractive and the profits meagre. So they move on. Ask yourself why the particular business you are interested in has come on the open market. A man does not sell a profitable business without good reason. And usually it isn’t necessary to go on the open market if the profits are good. Ask yourself whether you are certain that all the profits of the business come from legitimate trade. Ex Private Jones could have made a comfortable living in his milk-bar if he had been willing to go in for bookmaking.

Probably you can’t give an answer to any of these questions because you are without previous experience of the sort of business you are thinking of buying. If that is the case, get an accountant to investigate the business for you. If the vendor is honest, he would not expect you to take his word about profits and prospects. He will regard your caution as normal and wise. Don’t be stampeded by stories of those other buyers who are clamouring for a decision one way or the other before to-morrow night. It’s a very old story and very seldom true. Suppose your accountant has given you a favourable report on the proposi-

tion and you really believe there is a living in it. Now ask yourself the most important question of all—the question whether you are choosing a way of life you are going to enjoy. A small shop means long hours. Probably you won’t be able to afford an assistant ; you will be on the job yourself from 9 to 5 and if you want a week off you will have to risk loss of trade. If you fall ill, your earnings will stop. Being your own master sometimes means being your own slave.

Are you really better off, are you really more independent, as a small shopkeeper than you would be as a man with a trade— carpenter, a plumber, a fitter ? Those occupations don't keep you cooped up in a small shop each day, they enable you to work in the company of other men, they ensure you regular holidays with pay, and they involve a skill for which there is always a market. You don’t hear people lamenting the shortage of milkbar operators. Remember, too, that when you are demobilized you have an opportunity to learn a craft and to earn a living wage while you are learning. Have you good reasons for rejecting that chance ? If you have thought about all these things and still want your small business, good luck to you. But you owe it to yourself and your children to be certain you have thought about them.