Startups are overrated. You’re responsible for creating your own customer base and proving your business concept works else you end up penniless.
One way to ease into entrepreneurship is to buy a business that’s already in operation. Take a look at this step by step guide on how to buy an existing business.
1. Research Available Businesses
The most valuable tool on your side when considering how to buy an existing business is research. Good information helps you make good decisions.
Hire a team of business brokers to narrow down available businesses in your area. The great thing about working with brokers is they often have information on businesses for sale before they’re listed to the public.
Use this to your advantage to get better deals on potential businesses. Business brokers can consult with you to help you identify which business makes the most sense for your level of expertise.
2. Consult with a Team of Professionals
You’ll need a team of pros to assess any deals that come across your table. A certified public accountant is key in getting your financial paperwork in order for the transaction.
Accountants can also help you interpret any financials you receive from prospective businesses. Lawyers are needed for the contracting process and closing the deal.
Make sure you hire a team with a background in business mergers and acquisitions. These professionals already know which documents are necessary to creating a successful transaction so you won’t have to start from scratch.
3. Determine the Value of the Business
Business valuation services are necessary to prove the financial viability of the company you want to buy. Many people focus only on income when thinking of buying a business.
But income only tells one part of the story. Talk to your attorney about other ways to look at business valuation in the event you ever needed to liquidate the business for cash.
4. Secure Financing
Next, you’ll need financing to buy the business. Rarely do entrepreneurs buy a business using personal funds.
Instead, you’ll usually borrow against your existing business or personal assets. Higher net worth individuals typically get the best deals when it comes to loan terms because they are seen as a lower risk for the transaction.
Getting financing doesn’t mean you won’t have to contribute to the deal. Make sure you have business savings available to contribute to closing costs.
The business valuation documents will be used by the lender to determine whether the business can sustain itself financially.
5. Close on the Purchase
The final step after you’ve been approved for financing is to have your attorney draft the closing documents. This should be a lengthy part of the process as long as the buyer’s attorney has no issues with the terms.
Once all the contracts are signed, you’re the proud owner of a new functioning business.
How to Buy An Existing Business Remotely
It’s possible to learn how to buy an existing business remotely once you’ve learned the industry you’ve invested in. You can look at photos and financials to make a decision on whether or not a company is a good investment.
Take your time through the process if it’s your first time. Rushing can lead to careless financial mistakes.
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