ENTREPRENEURSHIP THROUGH ACQUISITION
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How to Buy an Existing Business: Tips to Find, Value, and Acquire Something Successful
Want to acquire something both pre-existing and successful? Click here to learn how to buy an existing business and put it on the path to success.
How to buy an existing business?
Tips to find, value, and acquire something successful
Want to acquire something both pre-existing and successful? Read on to learn how to buy an existing business and put it on the path to success.
How to buy an existing business?
Business acquisition is growing increasingly popular in the United States. Take franchising opportunities for example.
In 2020, there are more than 785,000 franchise establishments in the nation. This is the highest figure in the past 14 years.
Interest rates are still hovering near record lows meaning capital is cheap. The cost of money makes buying a new business more appealing than ever before. In addition, the nation’s economy is sitting on a solid foundation with strong consumer demand.
Read on to learn how to buy an existing business. Explore tips on how to find, value, and acquire a successful business investment.
Reasons to Buy an Existing Business
There are many good reasons for entrepreneurs to consider an existing business. For one, there will be a strong supply as Baby Boomers retire and look to sell.
From a business standpoint, you will inherit a proven business model. You can verify that the concept works simply by evaluating prior sales.
In addition, you get to leverage an established brand and product. The business comes with a loyal customer base, employees, inventory, and other assets.
Finding a Business For Sale
The first step in the acquisition process is finding a business for sale. Unlike homes, it is uncommon for a for-sale sign to be placed in front of the business. Existing businesses rarely advertise that they are looking for a seller.
Traditionally, investment bankers facilitate some business transactions. In other cases, accountants or lawyers will share information with prospective entrepreneurs. These professionals often get a heads up as they help plan the existing business owner’s retirement or other financial endeavors.
Another way to find a business for sale is by networking with local owners. However, these methods are old school and often lead to long waiting periods.
Modern entrepreneurs get to take advantage of online tools. There are online resources that use algorithms to pair together businesses looking to sell with entrepreneurs. Here, you can save search criteria like price and favorite businesses that you are interested in.
Your search may lead you to consider franchising opportunities. You can be matched up with a franchise that is in line with your passions.
Business Appraisal
Once the perfect business is found, you need to get an appraisal. In this process, finance professionals pour over the business to determine its value. Your team will review balance sheets, taxes, revenue statements, and more.
This appraisal is a critical step in getting financing to buy your new business. Unless cash resources are available, you can apply for a business acquisition loan. With cash or a pre-approval in hand, you can now make offers on existing businesses.
A Recap of How to Buy an Existing Business
Acquiring a business is not simple by any means. It takes a lot of research to find the right one. The good news is that there are professionals and platforms out there that can pair you with the best fit.
If you want to learn more about how to buy an existing business, sign up for BizNexus and start getting matched with opportunities today.
BizNexus -Learn More From Our YouTube Playlist:
BUSINESS ACQUISITION
Have you checked out our podcast?
THE BIZNEXUS ROUNDUP
Quick & dirty interviews, war stories & tips from the trenches of business acquisition, growth & sale. We aim for value, efficiency & fun, so you'll walk away with something useful to take with you along the journey of buying, growing & selling a business.
Franchise Frenzy! How to Buy a Franchise in 5 Simple Steps
Let us help you make that dream happen by showing you how to buy a franchise in just a few simple steps!
How to buy a franchise?
Here are 5 simple steps
If you're thinking of buying a franchise, there are some things you'll need to know about the process. Read through to learn more!
Buy a franchise
Is owning a franchise one of your dreams? Let us help you make that dream happen by showing you how to buy a franchise in just a few simple steps!
What is a Franchise?
Someone who buys a franchise takes over a store of an already established company such as McDonald's or Edible Arrangements. You aren’t having to start your business from scratch.
You must pay the franchisor a fee upfront, and then pay continuing royalties on your business. They provide you with a trademark, support, and rights to their equipment and products.
Step 1: Consider Your Options
Look for a list of franchise chains to determine which one is best for you. Here are a couple of franchise corporations:
Soccer Shots
Checkers Restaurant
Culvers Restaurant
Edible Arrangements
Planet Fitness
Firehouse Subs
If you are interested in looking at a list of the top 2020 franchise locations, click here.
Step 2: Keep in Mind Qualifications
When buying a franchise, several qualifications must be met. I have made you a list below:
Have a credit score of at least 680 (check your score here for free.)
Capital—you will need to place a large fee initially along with other necessary franchise costs.
Net Worth—You will need your net worth to be higher than your investment.
Industry Experience—Choose a business you are familiar with. Relevant experience is one thing franchisors look at.
Experience as a Manager—You must have some type of managerial experience when running a franchise business.
Step 3: Apply for a Franchise
Fill out your chosen franchise’s applications and questionnaire forms! Once you pass the application process, the franchise will send a representative to meet with you to give you a Franchise Disclosure Document (FDD).
This document will detail the company’s fees, rules, financial history, and legal aspects. Legally, you have 14 days to review this 50-page document before you sign any binding agreements with the company.
Step 4: Determine Which Finance Option is Best for You
When it comes to funding your business, here are a couple of options you can choose from that will help you get your franchise started:
Funding from the franchise itself—Some companies offer full or partial financing options.
Step 5: Buy a Franchise Location
You can choose to lease (rent) a property or purchase outright for your business. Most new franchisees opt to lease a property since it is less money up-front. As their business grows, they may choose to buy a location.
When choosing your location whether you lease or buy, you need to consider the following:
Is your location safe and easily accessible?
Are there any major competitors to your business nearby?
Is your building space large enough?
Is your location in a highly trafficked area?
Does the location add to your advertisement visibility or subtract?
Final Thoughts
Now that we have discussed some of the ways to make your dream a reality, we must warn you, following your dream is never going to be easy.
Opening a franchise will take a lot of time, effort, and hard work but once you accomplish the goals you set forth, you will find the rewards are worth every ounce you’ve invested.
Want to learn more about how to buy a franchise? Contact us today to learn more about how we can help.
BizNexus -Learn More From Our YouTube Playlist:
BUSINESS ACQUISITION
Have you checked out our podcast?
THE BIZNEXUS ROUNDUP
Quick & dirty interviews, war stories & tips from the trenches of business acquisition, growth & sale. We aim for value, efficiency & fun, so you'll walk away with something useful to take with you along the journey of buying, growing & selling a business.