Owning a business is a lifelong goal for many Americans. Some want to work their way to the top by starting from scratch while others want to take their experience and apply it to businesses already in operation. For those looking to acquire a company, how do you find out where to buy a business in the first place?
To answer this question, we dug around and found 5 areas where you can learn how to find businesses for sale, along with 9 sites you can use to search for your perfect opportunity. Plus, we identify how to determine whether or not buying a business is right for you and how to close the deal once you have.
Where to Find Businesses for Sale
Knowing when a business is available via sale isn’t as obvious or ubiquitous as buying a home or an automobile. However, there are still a variety of ways you can find businesses for sale, which we’ve listed below:
Calling Local Businesses
In an increasingly digital world, it might seem strange to call a business to ask if they’re either for sale or, at the very least, open to being sold. Though it may seem a bit off, it’s a perfectly acceptable practice if you
if have both the intention and the means to make good on your inquiry. It’s unlikely that your initial call will result in an agreement of sale. So your primary goal should be to establish relationships with business owners and get a sense of the market around you.
Even if they’re not selling, there’s a good chance they’ll know of someone who’s looking to retire, relocate or simply needs to move onto their next venture. By networking and letting owners know you’re interested in acquiring a business, they may discover other opportunities for you —or keep you in mind when they are ready to sell.
Using a Business Broker
Working with a business broker is a great way to find an established business for sale. Their job is to help you figure out what you’re interested in, pinpoint your business skills, connect you with businesses that might be a good fit and, ultimately, guide your decisions. A business broker can help educate you on which industries and business types you should avoid based on your skills. Brokers are also very helpful during negotiations. A broker can guide you on what you need to consider and what you should be asking for in the process.
Whether you’re the one using ad space to promote your interest in buying a business or sifting through the classified listings in your local newspaper, leveraging advertising is a great way to discover potential business targets.
Tapping Into Your Network
Just as we learned with calling businesses to see if they’re for sale, establishing relationships is essential to sustaining any business, especially one in transition. It’s wise to lean on your current connections to see if they know of anyone looking to sell. Again, even if they’re not, having them on your side and being able to represent you in a positive light to other owners who may be in the seller’s market makes your job much easier.
While consumers have sites like Zillow and CarMax to simplify their real estate and automotive buying searches, aspiring business owners now have access to marketplace sites where they can browse hundreds of businesses that appeal to them and are listed in their price range. Let’s take a look at some of the best platforms entrepreneurs can use.
9 Sites for Discovering Local Businesses for Sale
Billed as “the Internet’s largest business for sale and franchise for sale marketplace”, BizBuySell.com gives owners the ability to buy or sell a business or franchise. The site makes this experience easier for everyone by offering owners the ability to both list and search businesses by category and location, as well as allowing hopeful buyers to set both a minimum and maximum price. Additional benefits to using BizBuySell include the ability to search for business brokers in your area, as well as the ability to sign up for email alerts for any listings that match your search criteria.
With more than 30,000 listings, BusinessBroker.net consistently puts themselves at the top of the business selling marketplace. Users are able to search for business and franchise listings by industry and location and also discover the best brokers in the area. BusinessBroker also offers finance and loan tools to support buyers in understanding their business-purchasing decisions. In addition, there are professionals available to help guide first-time buyers during their search.
Just as you’re able to with BizBuySell and BusinessBroker, BizQuest.com allows users to search for businesses and franchises by location, industry and other defining categories. One of the biggest benefits to using BizQuest as a seller is that any ads you create are posted to major websites like The Wall Street Journal and The New York Times, further amplifying the reach of your listing.
In addition to the usual repertoire of business listing features, the things that set BusinessMart apart are the additional services they offer to small business owners. Say, for example, you’re a business owner looking to sell your first business to focus on a second but are also in the market for a reliable electrician to handle some changes to your storefront. BusinessMart.com allows qualified vendors to provide quotes to small business owners seeking their services.
It’s common for LoopNet.com to feature more than half-a-million commercial listings at one time, making it home to perhaps the largest online resource of businesses for sale. In addition to boasting mobile apps for both Android and Apple devices, LoopNet has partnerships with some of the largest real estate companies in the country, including Century 21, Re/Max Commercial, CBRE and Cushman & Wakefield.
Looking to buy a business outside of the U.S.? DealStream.com has users from around the world looking to buy and sell businesses beyond real estate, property and intellectual holdings. With more than 40,000 listings, DealStream also allows sellers to list other assets they have up for sale, including oil and gas resources. Another excellent benefit the site provides is access to more than 500,000 entrepreneurs, investment bankers and brokers. This type of access gives business owners the chance to interact with experts from across the globe, gaining new insights and perspective.
While the other sites do allow franchises to be listed through their platform, FranchiseGator.com focuses exclusively on businesses operating under specific licenses. Potential buyers can search for franchises based on industry, location, category and even on the amount they’re willing to spend. FranchiseGator also features content that gives franchisees expert advice on how to successfully operate a franchise.
The original sell anything, buy anything site is still a viable option for many would-be buyers and sellers. Craigslist.com allows users to search for virtually anything based on location, price and category. While there may not be as many listings today compared to years ago, it’s possible that a diamond in the rough can be found here.
How to Know If Buying a Small Business Is Right for You
To understand whether buying a small business for sale is the right investment for you—personally, professionally and profitably—there are 3 questions you need to ask yourself.
What Am I Interested In?
This question will be both the easiest and the most difficult to answer. It’s the easiest because you know a great deal about the things you’re interested in, what makes you tick, how they motivate you and what you may want to do with your time. It’s the most difficult because even though you may know what you’d like to do, it might not actually be what you want to do.
While this may sound strange, it has everything to do with where your skills reside versus where your passions lie. If you’re able to marry both your skills and your passions then it truly could be a business match made in heaven. However, it’s much more likely that you’ll be successful if you focus on an industry where you already have working knowledge and let your hobbies be your hobbies.
Is This a Smart Investment?
No one wants to buy a business where they won’t benefit. Identifying whether something is a smart investment starts with what you currently have to spend. Once you’ve found a business that you’d like to purchase, you’ll need to make the proper estimates of how much you’d need (and then want) to change about the business. This includes how it operates, the products and/or services you provide and the employees you’d need to make it profitable.
With that in mind, making sure the numbers add up should be your primary concern. Even if you’ve found a business that meets every other form of criteria on your list, your focus needs to be how much of a return you expect to see from your investment.
While the capital investment is crucial, your time is an asset that can’t be overlooked. You need to be spending the majority of your time driving the most value you possibly can. For example, if you’re not an expert in the field you’re buying into, it’ll be essential for you to spend time getting to learn the idiosyncrasies of the market and how your business can take advantage of them.
Are There Any Red Flags?
When a business is for sale, it could be that the current owner is moving, ready to retire or that they’ve found another, more personally-fulfilling opportunity. However, you need to also consider some of the other more troubling reasons for why an owner may be looking to sell.
As you’re collecting information about a business you’re interested in, it’s best to be on the lookout for these signs:
- Existing business debts
- Poor concept/no market for this product/service
- Significant competition
- Bad brand reputation
- Poor location
- Inventory issues
- Equipment problems
Having discussions with neighboring or associated businesses who’ve built a report with the seller is another great way to understand whether or not there’s anything under the surface you should be aware of. These people can provide a different and necessary perspective on the business you wouldn’t get any other way.
Once you’ve done both your professional and financial research, getting to know the seller a bit more might be the best chance you have at understanding their motivations, reasons or even needs, to sell. Being aware of each of these perspectives and needs will help you in determining whether a business is right for you.
3 Steps to Buying the Best Small Business for You
After going through all of the ins and outs of finding the right business for sale and how to evaluate it properly, purchasing the company you’ve had your eyes on comes next. To do this properly, there are 3 essential steps.
Analyze the Deal
Your goal here is simple: determine how much it will cost to purchase the business. To arrive at this price, there are three methods of evaluation you should be aware of in order to guarantee that you’re making the fairest offer.
This approach gives you the best way to analyze a business that’s already turning a profit or anticipates a strong year. The forecasts used in this model give you an idea of the earnings of the company and therefore a more accurate valuation.
Best suited for businesses operating in manufacturing and other utilities requiring a significant amount of capital. By focusing on assets, you’ll take into account the value of the business’s assets, tangible and intangible, minus debts and liabilities.
The market approach takes a look at comparable businesses that have recently been sold and determines an average value based on previous sales.
Regardless of the method, when both you and the seller reach a price point that you’re comfortable with, that will be the final and, most likely, fairest price. Now all you need to do is secure the capital you need to purchase the business.
Organize Your Documents
Once you’ve gone over the business’s asking price and agreed to it in principle, you’ll need to work with a few professionals (banker, accountant and lawyer) to determine that all of the documents are in order. Each of these professionals will verify the accuracy of both your information and the details of the seller.
While your specific list of documents may be different, here are the essentials you’ll need to gather:
- Letter of intent
- License and permits
- Confidentiality agreement
- Contracts and leases
- Certificate of Good Standing
- Business financial statements
- Asset status for inventory, machinery, equipment and building
- Sales agreements
All of these documents paint a grander picture of the business you’re purchasing. Working with a lawyer may not seem essential at different times throughout the business buying process, but during these end stages, it’s crucial to protect your investment by every means.
Finalize and Close the Sale
Once you’ve agreed to everything that needs to be tied up, you’re ready to finish the process. To close on the business, you’ll need to put together a lot of legal documents, notes and agreements including the bill of sale, adjusted purchase price, patents, trademarks, non-compete agreement, asset acquisition statement and much more. For more information on these documents and the entire buying and closing process, see our blog on buying an existing business.
Finding the right business for you is a mixture of solid estimates, passion, knowledge and gut feeling. No business is or will be perfect, but by taking the time to balance everything appropriately, you’re bound to find a business that suits your needs.