How to Buy a Business for Sale

Business for Sale 1-2-3

Finding a Business for Sale

If you are thinking about starting a business, one option is to buy an existing business that already is generating a cash flow. Of course, when buying a business, you want to look for one that is profitable, with a good reputation, an existing customer base and a good system in place to lessen your risk.

Buying a business is different from starting your own business. It is not as straight-forwad as it may seem, and as a buyer, you need to educate yourself on businesses in the area and industry in which you want to purchase - before negotiating a contract. Sellers are known for over-valuing their businesses, and you don't want to get caught paying too much when you don't have to.

Planning and preparation are key to successfully buying a business for sale. Here are some of the things your want to do.

First, figure out the type of business that you want to purchase. This includes specifics like the location of the business and the size. Decide how much cash you want to invest and know exactly where the funding will be coming from. This includes getting pre-qualified for a loan, so you have a close approximation of how much financing you have to work with.

Prepare in advance so that when you reach the stage of putting together a contract with a business seller, you are ready to go. This means contacting any legal or accounting professionals whom you may need during the contract process.

This is also why you want to get pre-qualified. Once you find a business for sale that you want to buy, you don't want to have all sorts of issues holding up the escrow process. You want the deal to move quickly and get a signed contract.

When you look at a business for sale, you want to evaluate it like you would starting a business from scratch. Is it situated in a profitable location? Is there a significant labor pool to draw from when hiring employees? Is the cost of doing business low in that area? Are customers buying and are other businesses thriving nearby?

You can find many small businesses for sale in the newspaper classifieds "Business for Sale by Owner" and online on certain websites like BizBuySell.com. On BizBuySell, you can search for existing businesses for sale by location and also by business type, for example "restaurant for sale" or "car wash for sale".

You can also use business brokers to help you locate businesses for sale. Through brokers, you can find listings for sale that you might not otherwise find, but you pay a commission fee to the broker in exchange for this service.

You can find a business broker in your local area by using BizBuySell's broker finding tool on their website, for example if you are looking for a business for sale in Florida or business for sale in Texas. You can also search by city.

Not sure how the whole buying process works once you locate a business to buy? Find out from Attorney Fred Steingold how to find the right business for you, negotiate the terms and prepare and sign an agreement in his guide, "The Complete Guide to Buying a Business". (sample sales agreements included)

rated by entrepreneurs