Buying an existing business can be a great opportunity for entrepreneurs who want to hit the ground running. Aside from starting everything from scratch, you’ll be buying into a pre-existing customer base, a well-trained employee base and operating systems. Here we will cover the best ways to find businesses for sale and some key factors to consider when making the purchase.
How to Find Businesses for Sale
To many would-be entrepreneurs, buying an established business allows you to skip many of the issues a new business would face. However, locating ideal business opportunities requires meticulous planning, research, and strategy.
Why Buy an Existing Business?
There are a number of advantages in buying an existing business:
Loyal customer base: You acquire an already existing base of customers.
Operational systems: Processes, software, and logistics are established already.
Trained employees: You have a staff of experienced employees, saving time in hiring and training.
Immediate cash flow: The business is currently generating income. Therefore, you will see faster returns on your investment.
On the other hand, investing in a business is equally risky. For this reason, due diligence in financials, legal status, and market position is highly needed and should be well thought out in order to provide you with a valid investment.
Why Research Is Important
Researching a successful business to invest in is the very foundation. Lack of preparation will bring you to fall into financial pitfalls. You really need to be aware of the market, the up-to-date industry trends, and the real value of the company before investment in it.
Where to Find Businesses for Sale
Online Marketplaces for Buying a Business
The convenience of finding businesses for sale lies in online marketplaces. From thousands of listings to detailed filters that help you narrow down your search by industry, location, and price range. Here’s a look at a few options:
BizBuySell: One of the largest online business-for-sale marketplaces.
BusinessBroker.net: Also one of the biggest websites where one can look for specific businesses in every industry.
LoopNet: It basically deals with commercial real estate but will also have listed businesses for sale.
Franchise websites: It is ideal for when someone wants to buy into a franchise rather than a singular business.
Via these services, you can search through businesses by category, including revenue and profitability, geographic location. So you are sure to find one that exactly suits your goals.
Local Business for Sale Listings
If you prefer to purchase a business in your area, look at accessing local business sale listings. Look at classifieds in:
Newspapers and business journals: These will sometimes have listing for smaller, more local businesses.
Local business brokerages: You can also use Business brokers to connect with local businesses for sale. They are often very knowledgeable about the current market conditions as well as the finances of a specific business.
Networking and Referrals
Your personal and professional network can be a goldmine for finding businesses on sale. Utilize word-of-mouth opportunities, since many businesses are looking to sell.
Industry contacts: Contact industry trade associations, local business associations, or fellow associates to identify potential prospects.
Networking events: Attend local or industry-specific events for the opportunity to interact with business owners looking to sell.
How to Find Businesses for Sale by Owner
Benefits of Buying from Owners Directly
There are benefits associated with buying directly from the owner:
More cost-effective: There are no broker fees, which lower the overall cost of the transaction.
Flexibility in negotiation: In most cases, direct negotiation can often allow the purchasing party to be flexible with the terms and price.
Where to Look for Businesses for Sale by Owner
Classified ads – Websites like Craigslist or Gumtree normally have listings by the business owner.
Community boards – Check out both physical and online community bulletin boards for local small businesses seeking to sell.
Direct Contact: For this, you will have to directly approach the owner in case you have a particular business in your mind. Even though the business is not up for sale, they may listen to your offer.
How to Approach Business Owners
Approaching owners of a business with an offer to buy is always a touchy task, as it requires tact and professionalism on your part. Here’s how you can do it:
Introduction: This would be a fantastic introduction to the desire to buy the business. And tell why it would be a good transaction to take place for both parties.
Building Rapport: Build the trust because you are interested in their business’s success and longevity.
How to Value Businesses for Sale
In purchasing, there are a few key things to consider during this valuation process:
Financial health: Look into the balance sheet, revenues, profit margins, and liabilities of the company to understand its financial standing.
Market position: Evaluate the place the enterprise occupies in a particular market. Does it have a competitive advantage? What’s its growth potential?
Reputation and brand value: Go through customers’ reviews and online ratings, which define its reputation. Any established brand usually has higher worth.
Due Diligence: Due diligence before the purchase is a must. Check the legality, financial position, and operation of the business:
Legal status: Confirm that the business is valid and up to date and has no open cases or litigation in court.
Financial analysis: Hire a business attorney and accountant to review all the financial statements, contracts, and tax filings.
Financing Your Purchase
Options for Financing Your Business Purchase
Once you have identified a business to buy, the next step is financing. Following are some options:
SBA loans: The Small Business Administration has loans especially for purchasing businesses.
Personal savings and investments: You can finance the purchase with your own savings or find investors to share the financial burden.
Seller financing: Occasionally, an owner of the business being sold will finance part of the purchase price by letting the buyer pay them over time. You then pay the seller over time.
Tips for Getting Financing
To be more likely to be granted either a loan or an investment in your venture:
Write a sound business plan: If you seek to borrow money or attract an investor, present a business plan that details how you would grow the business and make it profitable.
Approach financial institutions: contact banks and other financial institutions that provide loans particular to small business purchases.
Recap of Key Steps to Find a Business for Sale
Here is how to find a business for sale in brief,
- Utilize online listings, local classifieds, and business brokerage services
- Do networking for word-of-mouth opportunities
- Find businesses that are for sale by owner due to less expensive broker fees while sometimes avoiding brokers all together
The key is to be patient and not rush into buying any particular business. Thorough research, due diligence, and a financing plan will ensure that a business purchase is done successfully. So, don’t hurry toward any deal; let every decision be an informed decision.
How FastLane HR Can Help
FastLane HR can provide expert guidance to lead you through the process of purchasing a business. From due diligence to solutions for HR and payroll, we’ve got you covered every step of the way in acquiring a business. Let FastLane HR assist you in finding a potential business opportunity that best fits your needs and facilitate a smooth ownership transition.
Find a business for sale that will satisfy your requirements and position you for future success with these steps.