Find Your Niche When Buying A Business

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Many businesses are started by individuals who see a niche that is not filled and decide to take the opportunity to provide the product or service and turn it into a profitable business.  Lots of research and planning go into the decision for this risk-taking experience.  What we are discussing in this article is finding a niche to add to the business you are purchasing.

Part of the buying process is preparing a business plan.  After you have found a business in which you are interested, have gone over the basic financial information, and have met with the owner to look at the business, discuss the operation and get questions answered, you make the decision it is the right business for you.  You may then want to analyze the financial statements and determine what is making the profit and what needs to be improved.  It helps to have some experience in the type of business you are purchasing, but sometimes management skills can transfer easily from one business to another.  When you decide everything appears to be as first presented, you are probably ready to make an offer.  The business broker can write the offer for you, making sure contingencies are included to protect you from losing your earnest deposit if anything unexpected or incorrect is found during the due diligence period.  In the business plan, you will prepare projected financials and will look for ways to improve the sales and profit.  Remember, the offer is made based on the history of the business; but the projections in the business plan will show the expected growth.  The ideal purchase is to find a profitable business with growth potential.

Now this is where you add your niche.  You have an idea for a product or service that will fit into this business.  Include this in your business plan, showing how it will fit, the cost involved, and the projected profit.  It must make your business more profitable and can make your business more valuable over a period of years, if not immediately.  You want it to maximize the overall value.

In the business plan, you will want to show how this niche will differentiate your business from your competitors.  When you go to the lender, you will have to be convincing of the need for this new product or service and how you are going to make it profitable and add value to the business.  The lender will be interested in how you are going to market this new niche.  Don’t forget word-of-mouth, especially since this is something your competitors do not have.  It must carry its own weight and not be a burden on the profitable business you are buying.

We have assumed you want to purchase this business and add your niche immediately.  Let’s look at an alternative.  It might be best to show in your business plan the addition after one or two years.  It is usually recommended to continue the operation of a profitable business without changes immediately after purchasing, since customers and employees are more comfortable with everything as it has been. Changes seem to be accepted easier if they are gradually made.  This would also give you time to become familiar with the business before adding something new.

It would be exciting to find a niche that would fit into a business you are purchasing, and you would know the best time to add it.  You definitely would not want to get your idea to a competitor.  Have all of your information in your business plan when you schedule your appointment with your lender, and you might get some good advice at that time.  A niche is good to find!

  • Author: Pat Jones
  • Title: President/Owner - Business Broker
  • Company: Pat Jones Business Brokers
  • Company Website:
  • Date: September 13, 2017
  • Category: Buying a Franchise or Business
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