Now that you have decided you would like to buy an existing small business, you are likely wondering what is next. Well, finding the right business to buy can be simple but you will need to be prepared, understand what is expected of you, and ensure you have the right kind of support on your team.
Step 1: Ask yourself: What kind of business would I like to buy?
You need to decide what industry you might like to enter. Does this industry align with not only your interests but also your skills? What kind of products or services do you feel confident you can market and sell successfully? All these questions are important before you make an offer on an existing business.
Step 2: Hire a business broker.
Now, before you begin your search, hire a business broker. Not only are they a great help for negotiations and contract drafting and signing, but they are also experts in both the selling and buying process. With a unique perspective from both sides of a sale, they provide invaluable advice during the process. Not to mention, they will come in handy with checklists, strategies, and a network of sellers with businesses for you to choose from.
Step 3: Establish your goals.
Before your search, you will need to establish what your goals are. For instance, what is your budget? What is the maximum amount you can spend? Not to mention other factors that need to be considered such as what industry, company size, location, sales, and staff you are interested in for investment. Without these goals, the search will be overwhelming and fruitless.
Step 4: Research! Search for businesses on sale
Your Transworld business broker has access to an extensive network of businesses for sale. With their guidance, you can punch in your preferred parameters (the goals you have established) and then begin your search!
Step: Make an offer!
Meet with business owners and tour the businesses. Getting to visit business you have interest in and meeting with the owners is crucial. Once you have reviewed the offering and met with the owner, at this point, you you will want to make a contingent offer on the business. If it is accepted then you can start the next step.
Step 6: Do your due diligence!
Have a signed purchase and sale agreement or LOI? It is time to do your due diligence. For due diligence, you will need to have a team of lawyers, accountants, and brokers in your corner. At this point, the experts need to do a deep dive into the business’s financials to ensure everything they have said about their numbers is true. To help, use this checklist As a start.
- Business licenses and permits
- Organizational paperwork
- Environmental inspections
- Contracts and leases
- Status of inventory, equipment, furniture, and real estate
- Past financials and supporting documents like bank statements.
- Lein search
- Non- Compete Agreements or Anti-Solicitation Agreements to protect your purchase
Step 7: Go to the closing
Once all the supporting documents, leases and contingencies are handled. You can move to get the deal closed and start the transition period! Congratulations!
To buy a small business, you will need money on hand to make the purchase but arguably, the most important thing you need is a trusted and experienced business broker. Your broker will walk with you through the entire process and serve as your eyes and ears to help ensure you purchase a business you love and that the process is smooth from beginning to end. With knowledgeable brokers across the country, you can count on Transworld Business Advisors – contact us today.