A Guide to Buying a Business
The good, the bad, and what to watch out for — a practical guide for anyone thinking about buying an established business.
Getting a start in business can be difficult — long hours, fighting for relevance in a crowded market, and a lot of uncertainty. But there's another way. Buying an established business means someone else has already put in the hard yards, and while it's not without its risks, the upside can be significant.
Here's a practical look at the benefits, the pitfalls, and some tips for making a smart purchase.
The upside of buying established
There are real advantages to acquiring a business that's already up and running.
Easier to assess viability
One of the hardest things about a start-up is that almost everything is an assumption. With an established business, you have real financial data — revenue, costs, margins, and trends. Far fewer unknowns.
Some genuine shortcuts
Every customer on the database, every product refinement, every costly idea that's already been tried — it's all there at a known cost. Consider how much time and money has already been invested, and how much that's worth to you.
Immediate cash flow
Cash flow is the lifeblood of a business. When you buy an established operation, you gain access to an immediate flow of cash — to pay wages, buy stock, and even service the loan you used to buy it.
Finance may be easier to obtain
Lenders love data. When you're buying an established business, you can provide financial history, bank statements, and evidence of viability — which makes the lending decision much easier than funding a start-up based on assumptions.
What to watch out for
Buying a business isn't risk-free. Here are the things that trip people up.
The learning curve
If you didn't build it, it can take time to figure out how it all comes together. The bigger and more complex the business, the more important it is to have documented processes and procedures — not just tribal knowledge.
The secret sauce
Some businesses have know-how that only a few people really understand. Make sure the recipe for success is written down somewhere — not just in the outgoing owner's head.
Relationships are everything
People do business with people they like. Look closely at the outgoing owner's relationships — with customers, suppliers, and key staff — and consider the impact if those relationships don't transfer smoothly.
Under new management
Make sure you have the experience and expertise to run your new acquisition. The previous owner learned plenty of lessons along the way — lessons you may have missed.
Liabilities under the rug
When you buy a company (rather than its assets), you take on its liabilities too — tax debts, staff obligations, and more. Get professional advice on purchase structure. It's worth paying for.
Restraints of trade
Make sure the seller has appropriate restraints preventing them from setting up a competing business around the corner. It's more common than you'd think, and far too important to overlook.
Tips for buying well
Get professional help
The seller's broker, lawyer, and accountant are working for them — not you. At minimum, get your own accountant to review the financials, and a lawyer to review the sale agreement.
Play to your strengths
You'll always be safer buying a business in an industry you understand. If you're coming in as a generalist, make sure the business has key people who know the trade — or plan to recruit them.
Check everything
Look at every line in the financials and cross-check. The accounts should match the bank statements, tax history, and BAS lodgements. If something doesn't add up, find out why.
Don't neglect culture
Take any opportunity to talk to existing staff. The more insight you can gain into business culture before a purchase, the better prepared you'll be for day one.
Ask why they're selling
Don't just take it at face value. People move, retire, or get burnt out — all valid reasons. But there are also red flags: new competitors, changing regulations, or declining demand. Dig deeper.
How CFI can help
Preserve your capital
Don't consume all your savings in the purchase. CFI can fund your acquisition and preserve the capital you need to grow the business from day one.
Fast decisions
We make lending decisions in-house — not through a committee. Most applications are assessed within 24–48 hours, and many on the same day.
We back first-time buyers
CFI has helped thousands of Australians get their start in business. Relevant experience and a genuine contribution of your own funds go a long way with us.
Common questions
How much can I borrow to buy a business?
CFI offers business acquisition loans from $25,000 to $500,000, with terms up to 5 years. How much you can borrow depends on the business you're buying, your financial position, and how much of your own funds you're contributing.
Do I need a deposit to buy a business?
In most cases, yes — you'll need to contribute some of your own funds toward the purchase. The amount depends on the size of the purchase, the type of business, and your overall financial position. A CFI Specialist can give you a better idea based on your situation.
Can I get finance if I've never owned a business before?
Yes. CFI has helped thousands of Australians get their start in business. Relevant industry experience, a solid plan, and a genuine contribution of your own funds go a long way — even without prior business ownership.
How long does approval take?
CFI typically assesses applications within 24–48 hours. For straightforward business acquisitions with complete documentation, same-day decisions are common.
What's the difference between buying the assets and buying the company?
When you buy a business's assets (equipment, stock, goodwill), you get what you pay for and leave the old liabilities behind. When you buy the company (its shares), you take on everything — including any debts or obligations the business has. Most small business purchases are structured as asset purchases for this reason. Get professional advice on which structure suits your situation.
More questions? See our full FAQ or get in touch.
Thinking about buying a business?
Talk to a CFI Finance Specialist — we can help you figure out the finance before you commit.