How to purchase an existing business – Part 1

If you wish to be an entrepreneur but are unwilling to start from the scratch, you can find a running business and purchase it. By purchasing a running business there will already be a structure in place, and you won’t have to reinvent the wheel. If you choose this entrepreneurial path for yourself, you will need some guidance for finding and buying a business suitable for you to buy. Finding the right running business for you to acquire seems like a daunting and grueling task, however with the right information it can be managed. The following document provides a step-by-step procedure of finding a business for sale.

1.1 What decisions should you make beforehand?

You must decide the following before you begin your search:

1) Establish a budget

Setting a budget for the purchase will help you to outline the rest of the process. Instead of setting a fixed budget amount, it will be possible to set a budget range, including a minimum and maximum. You’ll be able to select the perfect venture for yourself with a little flexibility.

2) Select an area

The state in which you want to operate your business will help you focus your search because each state in the USA has different state business laws. It is recommended to research the market and become familiar with the local legislation before making this choice. You will find it easier to buy and operate as a result.

3) Finish your paperwork.

It’s crucial to have all the legal paperwork ready before looking for a business to buy in the USA.

4) Select the industry

It is advisable to focus your search by choosing the type of business you intend to operate, such as a gas station, restaurant, or one that provides a service. Your budget will determine this. The options accessible to you will become more limited if you establish a budget. You can choose filters for your search once you’ve made the aforementioned choices.

How do I find a business?

A) Internet search

1) Determine the top websites

The following websites are some of the leading broker websites, among the many online resources for information about firms for sale:

  • BizBuySell.com

It has more than 100,000 listings, making it one of the biggest online markets.

  • BizQuest.com

With almost 30,000 listings, it is a useful weblink.

  • Businessesforsale.com

With more than 50,000 listings, it includes business sales from 130 different nations. The greatest website for foreign sales is this one.

  • loop.net

The website specializes in multi-million dollar business transactions.

  • Craigslist

Small businesses in your neighborhood are involved. If you’re interested in purchasing a tiny local business, look there.

  • Digital Existence

2) Look for companies

On these websites, you can perform searches based on region, industry, and price range. The date it was posted is another way to filter the listing.

3) Configure email alerts

You may frequently set up an email alert so that you don’t have to visit these business websites every day. When a company that meets your criteria is listed, you’ll get an email. You must register for an account on the website in order to configure notifications.

4) Examine the industry.

These websites frequently include a lot of information. On BizBuySell, for instance, you may access a variety of financial data, including gross sales, inventory, cash flow, and real estate worth. On this website, you can also ask for a valuation study that compares your business to others in a comparable industry. Normally, this report is paid for. A non-disclosure agreement (NDA) will frequently be requested from you by the website before you may submit any information.

B) Contact Owners

1) Choose a preferred industry.

Concentrate on a single industry to make your search easier to manage. For instance, you might want to purchase a barbershop or convenience store. These are several industries, so if you don’t choose a concentration, you can find yourself quickly overwhelmed.

2) Request leads from attorneys and accountants

These professionals work with business owners and often know if an owner wants to sell. For leads, consult your own accountant and attorney.

3) Examine trade publications for the industry.

To persuade a competitor in the market to acquire their business, business owners may place advertisements in newsletters or trade publications. You can search online or visit your local library to find these publications.

4) Consult your network.

You could know people who have leads. For instance, they might conduct business with a person who wants to move on. See if anyone in your network knows of anyone who wants to sell by checking in with them. Check with them as well if you are a member of the Chamber of Commerce or similar business organization. They are an excellent source of knowledge.

5) Make random calls to business owners

Give business owners a call if you have no leads. Ask whether they know of someone who is considering selling their business after making an introduction. Ask the person to keep an eye out for you but explain that you don’t require a quick “yes” or “no.”

6) Send a follow-up letter

You can write a letter to the folks you phoned a few weeks after chatting with them on the phone. Include a business card of your own. Tell them you’re still looking to buy a company and ask them to call you if they have any suggestions.

7) Contact the company owners once more

You can phone the business owners again a week or so after delivering your letter to see if they’ve heard of anyone looking to sell their company. Request the names and phone numbers. Thank them for their time if they still don’t know of someone looking to sell. Additionally, request that they contact you again if they learn of anything later.

8) Speak to a seller-minded business owner

Inform the owner how you learned that they could be willing to sell. For instance, you could remark, “I heard that you’re ready to retire and searching for a buyer from Kathy Smith at Shop ‘N Save.” Owners who are thinking of selling frequently don’t advertise, so they’ll be curious to know how you learned about them. It’s not necessary to close the deal over the phone on the first call. However, you must first establish communication. Be prepared to discuss yourself and your previous professional experience. You want the company owner to consider you a credible buyer.

C) Consulting with a business broker

1) Locate a nearby broker

You can save time and money by using a business broker, especially if you’re looking to purchase a larger company. Based on your preferences (industry, region, and size), they will find firms that are for sale and can negotiate with the seller. A business broker may be located using one of the following methods: Find out from local business owners whether they have utilized brokers and whether they would recommend them. look up directories online. The state broker agencies with whom the International Business Broker’s Association is affiliated may have directories. A broker might be located on the BizBuySell.com website as well. Obtain a recommendation from the Chamber of Commerce in your area. Call and search the phone directory.

2) Arrange a meeting.

Call the broker you’ve found who seems trustworthy to set up a meeting. Ask if there is anything you need to bring to the consultation and briefly introduce yourself. Check the price as well. A few brokers provide no-cost consultations.

3) Question the broker

Make sure to ask the broker about their experience throughout the consultation. You want someone who had helped purchase businesses before. Think about posing the following queries:

  • How long has the broker been in business?

Longer is preferable. A qualified broker should have knowledge of law and accounting as well as expertise appraising businesses.

  • Which trade organisations do they participate in?

Belonging to a trade association demonstrates that the individual stays up to date in the industry. They might also be able to rely on a wider network.

  • Does the broker possess any credentials?

The broker must finish courses and pass an exam before receiving a certification, such as the certified business intermediary (CBI) designation.

  • How is the broker compensated?

Usually, the broker receives a commission from the sale; nevertheless, make sure to ask this question up front.

4) Talk about the kind of company you wish to purchase.

Before they can identify suitable businesses, brokers need to understand your needs. Talk about your passions and the businesses you want to invest in. The ability to examine your budget and determine whether it is reasonable makes business brokers excellent resources.

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