Many business buyers we have spoken with have a difficult time in finding the right business to buy. Most are not familiar with the business buying process and most (80%) never end up buying a business. Hopefully the information below will help you become one of the successful buyers!
There are many business buyers in the market now looking to buy a business. This means that you must be more diligent and pro-active in your search efforts to be effective. You have a lot of competition from many potential buyers right now! Read the beneficial information below. Good luck in your search!
1. Finding a good business to buy is a process that takes anywhere from 3 months to 2 years. You need to get the word out to as many people (associates, business owners, business brokers, agents, friends, etc.) as possible that you are looking! Call business brokers, CPA’s, consultants, business attorneys, etc. and let them know you are in the market to buy!
2. Search every day on BizBen.com - both new listings and seasoned businesses for sale. Make sure you register for a BizBen Power User Account where you can sign up for Instant Email Alerts & Daily Reports of new listings, and save any listings you are interested in one central location. Be persistent, consistent, and professional with all brokers, agents, and business owners you come into contact with. Since over 200 new listings come on the market everyday on BizBen.com you want to make sure you get the jump on other potential business buyers!
3. Make sure you have an adequate down payment for the businesses you are searching for. You will need anywhere from 10% to 40% for a down payment. Also check to see if potential sellers you are talking with will take back a note – many will especially if they are motivated.
4. Get "professionally" pre-qualified for financing early in the process of buying either by multiple lenders and financial institutions or by a financing specialist in business purchase financing. This could make a difference very quickly since many of the better businesses for sale sell rather quickly. You don’t want to be hunting around for financing while another “qualified” buyer gets the business you want!
5. Identify what types and sizes of businesses you are interested in before you start looking. Also know what geographic areas you are willing to buy a business in. Business brokers and agents will want to know this info, and if you appear not sure, in most cases you won’t be taken as a serious business buyer, thus limiting your selection and chances of finding a good business to buy. Also make sure you have a: Buyer Profile, Personal Financial Statement, Resume, and Professional Pre-Qualification Letter For Financing forms completed and ready to fax back with any NDA's completed.
6. If you find a business you like, put in an offer immediately since this effectively accomplishes several things. First, it locks out other business buyers while you explore the business more thoroughly. Second, it shows the seller you are serious enough to write an offer. You would be surprised how many buyers don’t write an offer thinking they may insult the seller or that the seller may say no – you may just get a yes and a great deal just for presenting an offer – go for it!
7. Make sure you do your due diligence (investigation of the business) after your offer accepted. Usually you get 10 to 24 days (this time period is negotiable) to verify that the information presented to you is correct. Ask for and get 3 years of current business tax returns and financials and other important documents to verify the numbers and information that you received from the business broker or business owner.
8. Selecting a professional escrow company to handle your escrow is a very important process. Most agents want their favorite escrow company to handle the deal, but you as the buyer in the purchase agreement get to select the escrow company if you desire. Escrow companies for business sale transactions are very different than real estate escrows!
Good luck in your search to buy a business! |
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Peter Siegel, MBA - BizBen Founder, Author, Consultant
Peter Siegel, MBA is the founder and President of BizBen.com - Businesses For Sale In California. A nationally recognized author (3 books and a syndicated small business blog) and expert consultant (national SBA small business specialist) on selling and buying businesses, he provides professional assistance to business brokers, agents, and business owners in getting maximum response in their advertising & marketing efforts in regards to selling small to mid-sized businesses. If you are selling a business and need professional assistance utilizing high performance advertising, marketing, and highly effective strategies, or individual customization with your BizBen Power Search options in buying a California business, you can reach him at 866-270-6278.
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