Building a business from the ground up is not an easy task. It takes a significant amount of effort to start a business from scratch. But you can avoid this stress by deciding to buy an existing business instead. When you do so, you’ll be able to build your portfolio without the pressures and demands that come with a new business. In most cases, finding interesting small businesses for sale presents less of a challenge than building a new one from scratch. This is because you are taking over an operation that is already generating cash flow and profits. An established business also comes with a recognizable brand with a track record, suppliers and marketing contacts, trained employees, less work, less risk, among other things.
Despite the upsides, you don’t want to buy a business just because it’s successful. Ensure that it is in an industry with which you are familiar and one that you understand. Take into consideration the types of companies you are interested in and which ones will match your experience and skills. Following these steps will help ensure that your new endeavor is a successful one.
Check out our marketplace of interesting small businesses for sale
The internet has made it easy to find interesting small businesses for sale fast. A quick search for a business for sale near you will reveal numerous results to pick from. So you’ll need to do due diligence to identify the right ones for you. Good sites allow you to narrow down searches based on location, industry, and price. Our listings section here on the site, has all the features discussed.
Check out magazines and newspapers listings
Not all business owners share their business for sale online. Some still prefer to use magazines, newspapers, and even mails. So, you want to check them out for new listings. It might be beneficial to find niche-specific magazines and publications because this is where you are most likely to find a business you’re interested in.
Use a local M&A business broker
A lot goes into the business buying process. Unless you are good at it and have enough time to spare, it is best to leave the task to a professional. Although business brokers mostly help small business owners sell their businesses, they can also help buyers like you in various ways. For instance, the broker can do a highly targeted search for businesses that match your acquisition criteria. He or she can help you figure out what you are interested in – in case you still haven’t made your mind yet. Contact us today to get started.
Use your personal and professional networks
If you happen to know someone who knows someone who wants to sell their business, you can have them connect you. You can also join different platforms and forums that bring business people together. Your local Chamber of Commerce is one such organization. It organizes local classes, seminars, and meetings for the business community, giving you a perfect chance to network and share your interest in buying a business. If you are lucky, you may find a seller within your network and even get a good deal buying from them.
Contact prospects directly
Although many business owners interested in selling like to maintain confidentiality, you may still come across those who do so publicly. In this case, you can decide to call them directly or send them an email. It’s also possible to find businesses on sale on platforms like Facebook, LinkedIn, forums, Craiglist.com and other sites. Usually, these ads come with contact details like a phone number or email address that you can use to reach the relevant person.
Steps to buying a business
Finding some interesting businesses for sale is only the first step. Unlike most purchases, buying a business is unique as it can lead to significant tax, financial, legal liability, among other issues. That’s why you need to follow a structure that reduces your risk after closing the deal. Here are some quick steps to follow.
If you are familiar with the business and pricing, you can check cash flow, balance sheet, tangible and intangible assets, income statements, and tax returns to get a sense of the price. But if you aren’t, then you should recruit a broker, accountant, appraiser, investment banker, or other valuation specialists to help. This is also the best time to put your finances in order.
Select a deal structure
Decide whether it’s an asset purchase, stock purchase, or merger. Each option has a different layer of complexity, as well as liability and tax consequences. You can work with a lawyer, tax expert, or accountant to establish a structure that matches your tax and liability needs.
Collect all essential information and documents
Once you determine the price and transaction structure for your acquisition, the next step is to sign a Letter of Intent (LOI). This is a precise, non-binding letter that you and the seller sign. It highlights the essential deal points like price, deal structure, due diligence specifications, expectations, expected time of closing, and so on. You’ll also need to:
- Negotiate the purchase agreement
- Get all approvals and consents
- Do your proper due diligence to evaluate everything that may create any liability
When everything checks and you are ready, willing, and able to pay the agreed price, the seller should be prepared to hand over documents, stock certificates, and other essentials to transfer ownership legally.
Get professional help from a business broker
A talented business broker, like the ones at BuyOrSellBusiness.com, will know much more about when, how and where you may find interesting small businesses for sale. He or she are able to help you with everything you need to find a business for sale that is best suited for you.