I Want To Buy An Existing Small Business

If you have the funds to make a 10-20 percent down payment, industry experience or business management skills, and good credit scores, an SBA loan would be ideal. If yours is a large business, you can apply to the big banks (this is one of the toughest sources of financing for small businesses to tap into).

i want to buy an existing small business

Having your own business is great. Building one from scratch? Really hard. Which is why some entrepreneurs opt to buy an existing business outright. There are other reasons to buy a business too, like acquiring an up-and-coming competitor, or just building your investment portfolio.

At some point, while jumping through legal hoops, you might have forgotten that you just became a small business owner. Congrats! Your new life awaits. And if your brand new business needs bookkeeping, Bench can help with that.

Building your own business is hard work. That's why many entrepreneurs choose to buy an existing business rather than starting from scratch. But how can you avoid sinking all your resources into a business that is sure to fail? What should you look for? What should you avoid?

This article will help you evaluate the advantages and disadvantages of buying an existing business, as well as provide you with some tips that should help guide you as you make what is bound to be one of the most important decisions you will ever make.

There are several advantages to buying an existing business as opposed to starting your own. Most obviously, you save time. Suppose you want to start a retail business. It may take months for you to build an adequate inventory. Opening your own restaurant means creating your own recipes and menus; building a manufacturing business from scratch can take years. But when you purchase an existing business, the "dirty work" has already been done.

If the business you want to buy offers a product or a service, you can evaluate the operating history and better understand the demonstrated market. Are people buying the product or service? What are they willing to pay? What type of advertising has been most effective? When you start your own business, it can take many years of trial and error to establish your market. Purchasing a business can alleviate this process.

Buying an existing business will allow you to evaluate its cash flow and operating expenses, giving you a better idea of how much investment capital you will need. When you start your own business, these numbers are much more difficult to estimate, and investors consider start-up businesses higher risk than existing ones with operating histories and proven track records.

Perhaps the biggest advantage to buying over starting a business is the existing business's potential. You may see growth opportunities the current owner doesn't, or maybe you have a superior business plan. Your enthusiasm and excitement for the business can revive it and help it to grow, and often relatively minor changes in advertising, personnel, or procedure can greatly improve profitability.

Of course, there are disadvantages to buying a business, and you must weigh them seriously against the advantages. For example, unless you plan to replace all of the existing staff, you will have employees working for you whom you did not hire and whom you do not know. They may be resistant to the changes that you make. You may find it difficult to motivate employees who have become complacent under the old management, or that there are personality conflicts between new and existing employees.

Additionally, make sure you understand the current customer base. Financial records indicate only the number of sales or clients, not the level of customer satisfaction. What if you inherit a dissatisfied customer base? Or, conversely, what if the customer base purchases the product or uses the service simply because they have a relationship with the current owner? This problem can present itself particularly if the business you purchase is a family business, a small-town business, or in many cases, both.

And last but not least, buying a business means you miss out on all the excitement that comes with starting a business of your own. Depending on your personality, you may want to create something unique, unlike anything the world has ever seen. When you purchase an existing business, you have to ask yourself if you are willing to take on something someone else has created. Will you be satisfied taking the reins? Or do you want to buy your own horse, build your own carriage, and be in control from the get-go?

Buying a franchise can be a lot like starting your own business. You will likely have construction or, at least, remodeling costs. However, unlike starting your own business, you are not on your own. You will have a parent company to instruct you through the start-up process, and later to guide you in your operating procedures. But ask yourself: are you willing to take direction and to follow procedures you did not create? Oftentimes, entrepreneurs are entrepreneurs because they want to be independent and will resent not being in total control.

One thing to note is that most venture capitalists only invest in businesses with an existing plan. So, if you plan to use this approach, remember that you will need to sell the business or buy out the investor at some point.

The key to buying an existing business without money is to be able to get the deal done. Your ability to make a good no-money deal highly depends on your ability to sell yourself to the right person, the right way, and persuasively.

If you think you have the chops to be an entrepreneur, but would rather not start with a new idea -- or just plain don't have a new idea worth starting -- you may be a great candidate to buy an existing business instead.

While buying an existing business typically involves more upfront cost, it also presents less risk than starting from scratch. Financially, you're looking at actual profit and loss records rather than rough estimates, and there's a clear history of sales to point to. You may also acquire valuable patents or copyrights, or have the opportunity to drive a stagnant business in an exciting direction with your expertise.

In reality, founders sell their businesses for a myriad of reasons. They may be in a different life stage, and the needs of the business no longer match their lifestyle. Or maybe they've grown bored with the existing business model, or they're excited about a new idea. The business they started may be a great one, just not one they are passionate about running day-to-day anymore.

First put out some feelers close to home. Are your friends who launched a successful app ready to move on to their next project? Do you work for a small business you love whose owners may be willing to sell? Or if you're keeping it small and local, maybe the owners of your favorite local coffee shop are ready to sell out and move to Bermuda?

While there are many benefits to purchasing an existing business, it can certainly be an expensive option. Unless you're independently wealthy or have a financial backer, you'll likely need funding to make the sale.

Business loan: Alternatively, you could take out a term loan to purchase the business through a traditional bank or an online alternative lender. The good news here is that lenders are often more open to loans for purchasing existing businesses with a known revenue history. Even so, your personal financials will play a big role in your ability to qualify.

Choosing to buy an existing business is a valuable entrepreneurial feat that will impact your life, your community and the lives of your employees for years. With the right connection and a lot of hard work on the transition, you may be the perfect person to turn a good business model into great future for all involved.

Now that you have found a business to buy, you need funding. Luckily, there is an organization named SBA (U.S. Small Business Administration), which mainly helps people like you to purchase small businesses.

Buying an existing business has many advantages over starting an entirely new one. Existing businesses typically already have employees, clients, inventory, processes, cash flow, and historical financial performance. While operations can begin right away, buying an existing business presents several challenges that should be understood before you begin the process.

Buying an existing business will often cost more money upfront than starting one from scratch. But, much of the startup legwork is already done. It is important to explore the business opportunity thoroughly and with professional guidance to understand potential problems or debts that will come with the business purchase. Existing problems can remain hidden until after the final sale, like damaged or outdated equipment or inventory, issues with real estate property or location, or heavy dependence on a single client.

The size, location(s), and maturity of a business will all affect the commitment. Consider how hands-on you want to be with your business and again, be honest and realistic about your expectations of becoming an entrepreneur. You might consider hiring a business broker who can help you explore available businesses as they compare to your interests and ideal business plan, and negotiate deals when the time comes.

Congratulations! You are now a proud business owner and have successfully completed all of the steps to buy a business. We encourage you to explore small business support and education in your area to learn how to maintain proper cash flow, keep track of all your assets, and gain extra help with managing employees and other related tasks.

Because your lender will need to get approval from the SBA to back your loan, the application process and paperwork for an SBA 7(a) loan can be lengthy. However, these loans typically boast better terms than traditional small business loans, and sometimes even come with counseling to ensure your business runs efficiently.

If you want to be an entrepreneur but don't have a new business idea to start with, buying an existing business can be a good option for you. Instead of starting a company from scratch, purchasing an existing business is more affordable and less risky. 041b061a72