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Updated: 25-02-2011

Buying Cheap? The Risk of Bargain Hunting in Tenerife

Everyone wants to find a bargain business for sale in Tenerife but some prospective buyers, often new to the idea of running their own business, make a commercially suicidal mistake. They confuse the word bargain for another word: Cheap. And this leads to all sorts of problems.


This is a natural but quite naive mistake to make. Even though in everyday life we may know the difference between something that is good value, i.e. good quality for the price and something that is cheap and tatty, in the unfamiliar ground of looking for a Tenerife business for sale some people can lose sight of this simple common sense.

Businesses, just like anything else, are only cheap if there is a reason for it. Of course every potential purchaser hopes that the reason is because the current owner is 'desperate to sell'. They think that because there has been an economic downturn, every business owner will be dying to sell up for a song. The cold truth is that this is rarely the case.

Tenerife has been enjoying a significantly more prosperous year in 2011 than the previous two, and 2013 has seen an even higher rise in tourist spending!

The reasons why a business might be cheap in Tenerife, and the only reasons why owners might be 'desperate to sell', is because there is something wrong! It might be that the business is based on the location that makes it difficult to sell. It could be because it has a bad trading history. Or it could be worse. There may be legal issues or licensing problems that mean that the business may have a limited lifespan.

Nevertheless this is the type of business for sale that so-called 'bargain hunters' seem to be keen to find. There are ecstatic when they find cheap business, and even happier when they have haggled the desperate owner to a lower price. They love to make another crucial mistake at this point by thinking they might save on a lawyer, because after all you can't go wrong buying a business that such a rock bottom price.

How wrong they are. At the end of the day we all know that you get what you pay for, and if you pay very little, you really can't expect very much. But if you scrimp so much that you won't take legal advice, then you have no one to blame but yourself when you find yourself owning a business that can't trade and a bunch of debts you never knew about.

An experienced entrepreneur will know that a potentially successful business is unlikely to be the cheapest. They will put a value on goodwill, history and the dependability of trade. They will know that a profitably trading businessman is the last person in the world to take the low offer. And if they do, the alarm bells will start to ring.

The cheaper the business, the less chance you are giving yourself of making a success of it. Indeed, buying a cheap business in Tenerife is more likely to be a commercially suicidal decision. If you are not experienced at buying and running your own business, then don't lose sight of your common sense. Running a business in Tenerife can be a wonderful and rewarding experience, but if you get it wrong from the start you may be doomed to shattered dreams and an empty bank account. Don't despair, though - check out these tips on valueing a business to avoid the common pitfalls  buyers in Tenerife commit, so you can snag your perfect bargain sale.

By Irina Saltmarsh

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