Buying a trade business: the deal, the checks and the funding

Buying an existing trade business can feel like a shortcut. The customers are there, the vans are signwritten, the phone rings. Sometimes it is exactly that. Other times the main asset walked out the door with the previous owner, and the price reflected a business that no longer exists.

Why buy a trade business instead of starting one?

The appeal is simple.

• A trading record. You can see what the business actually earned.
• Customers and referrals. Some work may continue from day one.
• Equipment and vehicles. The kit is already there.
• Staff. A trained crew saves months of hiring.
• Speed. You can be turning over in weeks, not years.

The catch is that you pay for those advantages in the price, and you inherit whatever is wrong as well.

What am I really buying?

The sale contract answers this, and it should list items precisely. Typical parts:

Part	Questions to ask
Equipment and vehicles	Condition, age, finance owing, titles
Stock and materials	Value, age, usability
Goodwill	What stops customers following the old owner?
Contracts	Will they transfer, and on what terms?
Staff	Entitlements owed, key people, willingness to stay
Premises or lease	Terms, rent, assignment
Brand and phone numbers	Included in the sale?

Goodwill deserves the most scrutiny. It is the price paid for customers and reputation, and it is the part that disappears if the relationship was with the owner personally.

What due diligence should a tradie do?

Go through it methodically, and bring an accountant and a lawyer.

1. The financials. Several years of tax returns, BAS and bank statements, checked against what you are told.
2. Customers. Who are the top ten, how long have they been customers and how do they pay?
3. Contracts and work in progress. What is promised, what is half done, what is owed?
4. Equipment. Inspect it, check service history and confirm no one else has a claim on it.
5. Staff. Entitlements owed, who is key and who might leave.
6. Licences and insurance. What does the business hold, and what will you need in your own name?
7. Compliance and disputes. Any open complaints, defect claims or regulator contact.

An illustrative example, not a real business. A tradie looks at buying a small electrical contractor with a high turnover. The books look good, but half the revenue comes from one builder who deals only with the retiring owner. The buyer negotiates a handover period where the owner introduces him on site, and ties part of the price to the builder staying on for twelve months. The deal is the same business, structured to reflect the real risk.

Do licences transfer?

Usually not. Trade licences generally attach to a person or a company rather than to the business itself, so the buyer typically needs their own and cannot simply inherit the seller’s. State and territory licensing bodies set the rules, so confirm with them before you commit. Insurance and registrations need the same check. A purchase that cannot legally operate on settlement day is no bargain.

How do I fund the purchase?

Rarely from one source. Buyers often combine:

• Their own savings, which shows commitment.
• Vendor terms, where the seller accepts part of the price over time.
• A business loan, often secured on property when the amount is larger.
• Equipment finance for vehicles and plant included in the sale.

Property-secured loans from $20k to $5m can support larger purchases, and our page on secured business loans explains first mortgages, second mortgages and caveats. Vehicles and plant can sit in their own structures, which keeps the main loan smaller. See the equipment finance hub for that side.

If a purchase is on your radar, see what funding might look like.

What will the lender want to see?

Expect questions about the business’s earnings, your own experience, the purchase price and its breakdown, and how the loan will be repaid from the business’s income. A clear summary helps: what you are buying, why it is worth the price, what you will do in the first ninety days and what could go wrong. The loan readiness checklist lists the documents most files need.

What are the common mistakes?

• Paying a high price for goodwill that leaves with the seller.
• Skipping due diligence because the deal feels urgent.
• Forgetting working capital after settlement, so the first month is a scramble.
• Assuming staff will stay.
• Not budgeting for the licences and insurance you need in your own name.

Leave room for working capital in the finance. Many buyers fund the purchase and then run short the first time a big invoice is slow. Our page on expanding to a second crew covers the cash build-up that follows growth, which applies to an acquisition too.

How should the handover work?

Plan it as carefully as the price. A good handover period lets the seller introduce you to customers, suppliers and staff, and explains jobs in progress and the quirks of the equipment. Agree how long it lasts, what the seller is paid for it and what they promise not to do afterwards, such as setting up nearby and approaching old customers. Ask your lawyer to put it in the contract rather than leaving it to goodwill.

Buy with your eyes open

A good purchase gives you a running start. A bad one gives you someone else’s problems at a price. The difference is due diligence, honest advice and funding that leaves room to breathe.

An enquiry takes about a minute and is not a credit check at that stage. Your details are not spread across a pile of lenders, so your phone will not run hot. A real person reads the deal and talks through what could work. Please fill the form in accurately, including the price and what you plan to buy, so we match you properly the first time. Explore funding for your purchase.