When most people imagine entrepreneurs, they envision individuals, with a unique and original idea, who had to struggle and take risks to reach success. However, not all entrepreneurs get into business this way. There are some who take fewer risks, some who find the journey fairly easy, and some who lack the amazing idea commonly associated with entrepreneurship. It is these individuals who are generally good candidates to buy an existing small business instead. If this sounds like the idea for you, then here are five steps that you will need to take.
Decide What You’re After
Purchasing a small business is an absolutely huge decision that will impact your life for years to come. For this reason, it’s important that you understand exactly the type of business you’re after. You’ll need to consider the industry you’re interested in and the lifestyle you want to lead once the sale has gone through. You’ll also need to decide whether or not you’re willing to move to be closer to your company. Until you know these things, you can’t start your research.
Research The Businesses Available
Once you’ve figured out what you want, you’ll need to start researching the businesses that are currently on the market. Before you start looking online, you should contact professionals, like First Choice Business Brokers, to help you through the buying process. You could also put out feelers a little closer to home and speak to your business clients and contacts to see if they have any information for you. Just be aware that you may encounter illegitimate opportunities.
Complete Your Due Diligence
When you find a business that works for you, you’ll probably want to get the ball rolling right away, but it’s crucial that you slow down for a moment before you get too excited. The business that you’re considering may look great on the surface, but there could be any number of issues hiding underneath, all of which could cause you trouble and cost you money. For this reason, you should do your homework and assemble an acquisitions team before you go any further.
Source The Necessary Funding
There are lots of benefits that come with buying an existing business, but there’s no denying that this is an expensive option. Most entrepreneurs fund their business ventures themselves, but considering the large cost, this isn’t usually possible when purchasing an established company. With that in mind, you’ll likely need funding to make the sale. Thankfully, there are a few financing options that you could consider, including angel investors, business loans, and seller-financing.
Draft A Sales Agreement
After choosing your business, negotiating a deal, and sourcing the necessary funding, all that’s left to do is make the purchase. This means drafting a sales agreement and signing on the dotted line. However, before you do this, it’s vital that you make sure that you’re working with a trusted and reputable acquisitions attorney and that you understand the terms of the agreement before you sign. After all, you don’t want any trouble at closing or after the sale has gone through.
Buying an existing small business is generally less risky and more profitable than launching a startup of your own. If this sounds like the thing for you, then the steps above should help you through the process.