Buying a business in Nigeria isn’t as difficult as starting a business from scratch. Though to buy a business in Nigeria, it requires an immense amount of effort, time, deliberation and consultations to arrive at a suitable and profitable business to buy.
The first order to buying a business in Nigeria is to think hard about a business venture that can bring you the wealth and business growth that you desire.
One of the effective business growth strategies in the business world is growth by acquisition. That is, to acquire other businesses. You may decide to buy additional products to sell through your own distribution channels to existing and new customers. Or simply opt to buy an ongoing business.
It’s common knowledge that people don’t sell successful businesses, that’s why you must critically examine any existing business you want to buy.
This guide will provide you with practical steps and guidelines to navigate the process of buying a business in Nigeria successfully.
Table of Contents
1. Benefits of Buying an Existing Business
People choose to buy a business in Nigeria for several reasons;
First, buying an existing business saves you from the daunting tasks of starting a business from scratch, the business is already existing.
Second, you will not need to start building goodwill for your business as this would have been adequately handled by the current owner.
Third, you’ll inherit the existing customers and the proceeds of marketing efforts by the existing owner.
Fourth, buying an existing business offers you an opportunity to hit the ground running. An established business always has a track record that can give you a brighter idea of how much the business makes yearly.
You can’t get all these benefits when you’re starting a new business from scratch.
Related: 7 Most Difficult Challenges facing Small Scale Businesses In Nigeria
2. Consider Your Experience and Expertise
It’s ideal to buy a business in an industry that fits your expertise or where you can transfer your skills to grow the business. You put yourself in a stronger position if you buy a business that you understand.
If you’re looking forward to buying a business outside your area of expertise, then buy a business in low technology, with barriers preventing others from entering, and where you can quickly achieve profitability by reducing fixed costs.
3. Where To Buy A Business In Nigeria
In western world, people buy businesses from Flippa, Shopify or via the U.S.Small Business Administration. You can buy a business in Nigeria through the following sources;
- The classified ad section of Nigerian newspapers such as Premium Times Newspapers. TV ad is also a good source to buy a business in Nigeria
- Business magazines. Business magazines do allow business owners to announce selling of their business in the back of their magazines.
- Forums; you can get information on available business to buy in Nigeria via popular forums such as Nairaland.
- Online; you can Google search “businesses for sale in Nigeria”, you will get a list of available businesses for sale in Nigeria.
- You may help the service of a broker to buy a business in Nigeria. Business brokers offer you excellent sources whenever you’re searching for a business to buy in Nigeria.
4. Factors To Take Into Consideration Before Buying A Business In Nigeria
The reasons for selling the business. Is it a retirement reason or a cash out purpose? Always look for the fatal flaw so that you can easily fix it.
The value of the company assets – both tangible and intangible assets. You may need the service of a professional valuer for this purpose.
Examine the company assets and assess what needs to be changed. What does the business own? Are the company’s machinery in good working condition? Ask the current owner about what needs to be fixed.
How profitable is the business? How much does the business earn? One of the main reasons you want to buy an existing business is for you to be able to project your profit and returns on investment with some precision.
5. Financial Preparedness:
Assess your financial readiness for the acquisition. Determine your budget, including the purchase price, operational costs, and any potential renovations or improvements needed for the acquired business. Additionally, consider financing options such as loans or partnerships.
6. Engage Professional Advisors:
Seek the expertise of professional advisors, including lawyers, accountants, and business brokers, to guide you through legal and financial intricacies. Having a knowledgeable team ensures a smoother transaction and helps you avoid potential pitfalls.
7. Due Diligence:
Conduct a rigorous due diligence process to evaluate the financial health, legal standing, and operational aspects of the business you intend to buy. This includes scrutinizing financial statements, contracts, licenses, and any potential liabilities.
8. Negotiation and Agreement:
Once satisfied with the due diligence, enter into negotiations with the business owner. Be prepared to discuss terms like the purchase price, payment structure, and any conditions for the transfer of ownership. Work closely with your advisors to reach a mutually beneficial agreement.
9. Legal Documentation:
Engage a legal expert to draft and review the necessary legal documents, including the sales agreement, transfer of ownership documents, and any other contracts involved in the transaction. Ensure compliance with Nigerian business laws and regulations.
10. Approval and Registration:
Obtain the required approvals from regulatory bodies, and complete the registration process for the transfer of business ownership. This may involve submitting documents to the Corporate Affairs Commission (CAC) and adhering to any industry-specific regulations.
11. Transition and Integration:
Plan for a smooth transition and integration of the acquired business into your operations. Communicate effectively with existing employees, suppliers, and customers to ensure a seamless transfer of ownership.
12. Post-Acquisition Management:
After the acquisition, focus on effective management and strategic growth. Implement your business plan, monitor performance, and make necessary adjustments to maximize the potential of your newly acquired business.
Conclusion
Buying a business in Nigeria can be a rewarding endeavor with careful planning and execution.
By following these practical steps and guidelines, you can navigate the complexities of the acquisition process and set the foundation for a successful entrepreneurial journey to transform yourself and diversify your income.
Going shopping with money and nothing to find; Going shopping without money