Buy A Business
Where to Start?
Buy a business – Where to Start? The day you buy a business will be one of the most exciting days in your life. Nothing is more liberating than becoming your own boss and taking control of your own destiny. The hardest part is deciding where to start. Our guide to buying a business will teach you all the steps in the process including where to start. The most important step in the business buying process is to have a clear vision of what you’re looking for.
Identify Characteristics of the Ideal Business
Take time figure out the attributes that are most important. Finding the right business is much like finding the right spouse. The best place to start is to think through what you are looking for. Think through the location, business type, required skillset, lifestyle, and price of your ideal business.
You will need to go on a lot of ‘dates’ before you find the ‘one’. By dates, we mean you’ll need to inquire on many businesses. You’ll need to look through the financials and descriptions of each business in order to determine if it is a good fit. You’ll save everyone tremendous time if you can quickly determine if you are interested or not.
Set Realistic Expectations
Buying a business takes time. Set up a process that allows you to stay aware of new listings that come available. Expect that you may need to look at a hundred businesses before you make an offer. That’s not always the case, but it will prevent you from losing hope and giving up. Take time to get yourself prepared by talking with an SBA lender and other advisors beforehand. Have a template for an offer prepared and ready for when you find a business to make an offer.
There will never be the perfect business at the perfect price. All businesses have their strengths and weaknesses. Recognize these weaknesses provide opportunities to negotiate better terms. The perfect business—if it existed—would cost substantially more than the imperfect business. Figure out which business characteristics are non-negotiable and which you’ll be flexible with.
Leverage Online Listing Sites and Local Brokers
Leverage the online business listing sites. Be sure to regularly review them. If possible, set up notification emails specific to your search parameters. The most popular sites for searching for a business listing are bizbuysell.com, bizquest.com and businessbroker.net. While not perfect, these sites offer buyers a tremendous advantage over buyers from 10 years ago. Before these sites became popular, buyers had to rely on local business brokers.
Many local business brokerage firms (like Exit Brokers) will list their business listing on their websites. Many brokers send out information on new listings to their buyer network. Reach out to the local brokers and request to be added to their buyer network. This will allow you to know of new local listings that come up before they show up on listing sites.
Get Creative in Your Search to Buy a Business
Our best advice to buyers it to go the extra mile when searching for a business. Research databases or buy a list of businesses that fit your criteria and reach out to them directly. When you reach an owner ask they have thought about selling. If they aren’t interested, ask if they know of anyone in the industry who may be.
Finding a great business to buy is similar to finding a great piece of real estate. Read a few of those strategies and implement something similar in your business search. This is the best way to a motivated seller. Only with a motivated seller can you buy a business with little or none of your own money.
Buy a Business - Write an Offer that Sticks
From experience, approximately 50% of deals fall through after an initial offer is accepted. All reasons can be boiled down to one reason—mistrust. Mistrust is created in several ways, but it can be avoided if you follow the right process. The main strategy we suggest is getting agreement on as many issues as possible in the initial offer. If parties agree on the high-level details it gives everyone a starting point for later. This makes working out the exact details much easier later on and builds trust. This trust is important and can be leveraged to keep a deal on track.
If you are interested in learning how Exit Brokers can help you with the process to buy a business, send us a message. We’d be excited to hear from you.