THE BUSINESS BUYING PROCESS
HOW TO BUY A BUSINESS
The first step in the business buying process should be to make an appointment with an expert business broker who can show you all of the current business listings they have available for sale and listings from other brokers in your local area.
Be prepared to have an open mind when you buy a business. If, for example, you come from the corporate or sales world, you may not have a specific skill set that is directly transferable to a viable business you may buy. That should not detract you from considering such a business because what usually matters is your ability to learn how to please customers. These are the same skills you learned in the corporate or sales world.
Once you know the range of industries you are considering, it is best to determine the price range you will be searching for. Sometimes a seller may be willing to hold a Note for a portion of the purchase price, extending the price range of businesses you may consider. Additionally, you can always seek external financing (usually SBA), but be aware that there are always financing costs involved, and the SBA invariably requires you to guarantee the loan personally. The SBA may also require direct work experience within the relevant industry.
You must sign a non-disclosure statement and show proof of financial qualification to consider any business seriously. A business broker can assist you in evaluating any business’s financials and pertinent characteristics. You’ll then need to do your own ‘digging’ into the business, such as researching the industry online and the known competitors. Then the business broker can assist you in meeting with the seller, where you can gain a much keener sense of how the company operates and what you will need to do as the new owner.
When it comes time to make an offer, your expert business broker should ensure that it is a complete and coherent offer that fully expresses all of your terms and conditions. If eventually accepted, then the hard work really begins. The buyer must then go through the formal due diligence process, assume the lease (if applicable), and present a written purchase agreement. Each of these critical steps is taken in conjunction with the assistance of your business broker. Your dream of owning a business
can become a reality!