Buying an existing business offers a degree of comfort that is nonexistent in a new venture. This is because an existing business will have a tangible operation and financial history. This is the top reason why many people are looking for businesses for sale as opposed to building their businesses from scratch.
The advantages of buying an existing business include the following:
- Known proven formula
- Owner training and the transition is available
- Documented systems and processes
- Full control of the strategic direction
- Ability to review all records
These are just some of the top benefits of buying an existing business. You must, however, be careful before you go for a business on sale. This is because buying an existing business also has some risks.
The disadvantages of acquiring an existing company include:
- Ownership transfer problems
- Hard to find the business that is right for you
- The business may have issues that the seller did not disclose
- The initial investment is high
- The purchase process can be demanding
While there are risks involved, the advantages of buying existing businesses for sale far outweigh the disadvantages. Best of all there are a couple of things you can do to mitigate the risk.
Know the Kind of Business You Want
It is tempting to just buy any business that seems attractive and is within your financial reach. What you need to understand is that not every business will be perfect for you. When making your decision on biz business for sale, here are some important considerations you must make.
- Time: Do you want to buy a business that will be a full-time endeavor or a side hassle? You must be honest when answering this question. That way you will know how much time you will be able to devote to running the business. If you have a tight schedule, you may want to choose a business that has an existing team to handle daily operations.
- Your interests and skills: One of the reasons business owners put their businesses on sale is because they lack the skills or interest to run their businesses. You don’t want to get bored barely months into owning the business. The ideal business should match your interests and skills.
- Type of business: It is also important to take note of how involved it will be to run the business. A large business, for example, will be more demanding. Moreover, if you would love to buy a business that has multiple locations, you may be better suited to buying a franchise. The key is to be clear on the type of business that you want.
How to Find a Business to Buy
Now that you know what you want to buy, the next step is to learn how to find the kind of business that you want. There are three great channels you can use when looking for business for sale.
1.Online marketplaces: There are numerous business listing sites you can use. The main ones are BizBuySell, MergerPlace, BusinessesForSale, and BizQuest. Here you will find businesses that have been listed for sale.
2.Business brokers: These are professionals who help with the buying and selling of the business. They have better networks and will help you find businesses 4 sales that match your preferences. A broker can also help negotiate the best price, and terms and help you close fast.
3.Networking: The third option is to talk to family, friends, and colleagues. They may know of a business on sale or give you great recommendations.
Finding a business to buy is not as difficult as it used to be a decade or so ago. There are more resources available. Nevertheless, you need to understand that not every business is worth buying. As you get ready to buy a business, you need to do the following.
Calculate Potential ROI and Know Why the Business is for Sale
A great way to narrow down your list of potential business 4 sales is to calculate the potential return on investment. While calculating ROI can be complicated, the key is to compare the income of the business to your investment. Calculate how long it will take you to earn back your initial investment and make a profit.
Don’t take the seller’s word for it. When looking for a business for sale, you need to investigate your potential purchase. There is a due diligence phase allowed when buying a business. Take advantage of it. Start by checking the business with the Better Business Bureau and use other rating sites. Too many negative reviews are a red flag. You then need to go through all the documents presented to you by the seller and confirm that everything is accurate. It is also very important to understand why the business is for sale. Not all businesses are being sold for the best reasons.
Determine Your Budget
To narrow down the list of potential businesses further, you need to be honest about how much you plan on spending and how much you can get. There are many methods you can use to finance a business purchase.
The most common financing options are:
- Crowdfunding
- Partnerships
- Seller financing
- Venture capital
- Business loans
- Angel investors
- Selling stock to employees
Conclusion
A lot goes into the purchase of a biz business for sale. It is up to you to make sure that you are making the best decisions. Part of this requires hiring the right team to help with the purchase. You may need a business broker, a transaction attorney, an accountant, and a real estate agent in your corner. The input of these professionals will make the process easier when looking for a business for sale.