Spend Money to Make It: Financing Options for Buying a Business

Want To Buy A Business?

Financing Options For Buying A Business

If you've found the business you want to purchase, but aren't sure how to pay for it then this guide is for you. Keep reading to get the money you need.

Financing options for buying a business:

It doesn't matter if you're a solopreneur or a budding business owner who will employ hundreds. Starting a business requires capital. 

On average in the United States, it costs a whopping $30,000 to start a small business from scratch. That's averaging out the big guys with the little guys. You can imagine how much some entrepreneurs might be risking on their startups.

If you're unsure how much it will cost to start your business, you can check the estimated cost of your startup with Entrepreneur.com's calculator tool. There's more to consider than you might think.

Once you know how much you need, how are you going to get the money? Like dad says, "money doesn't grow on trees." Let's explore some financing options for buying a business and get you on your way to success.

Angel Investors

If you can snag an angel investor, you're in great hands. These guys know the risk of a budding startup and are willing to take it. They typically own more than $1M in assets which affords wriggle room for more risky investments.

The biggest downside to an angel investor is their need for even more detailed plans. You need to convince them of your credibility. Just because they are willing to take risks doesn't mean they're wanting to throw their money in a hole.

Do your research. Gather competition analysis, create detailed sales and marketing plans. Essentially, show your expertise in your market. 

Your idea needs longevity. If you're just sniffing out a trend but don't know how your product or service will fare in the long run, you won't attract an angel investor.

Lastly, be passionate. If you truly believe in your vision, that's infectious. If you've done your research and your idea has a long half-life, go all-in. Your ardent enthusiasm will help lubricate their pockets.

Micro-lending

If you've ruined your credit on previous passion projects, you may not be able to get a traditional loan. If you really think your business will take off, you might try a microloan. 

Micro-lenders are another group of risk-takers. But the return on their risk is higher. They charge a higher interest than a typical loan. 

How much higher? You could see APR as high as 30% in some cases, although that's rare. No need for collateral either which balances out the high interest rates.

One such example of micro-lending is peer-to-peer lending. Cutting out the gatekeepers gives more people access to small business funds than traditional means provide. 

A few examples of P2P lending companies: 

• Upstart: a group of ex-Googlers started a platform that judges borrowers not on FICO score but on education, academic performance, and work history.

• Funding Circle: After the founder's loan was rejected for the 96th time, they created Funding Circle for U.S. and U.K. small business owners.

• Prosper Marketplace, Inc.: This is the original U.S. P2P marketplace. It now serves over 800,000 people.

A Few Other Financing Options for Buying a Business

There are a few more financing options for buying a business outside of traditional loans from either the government or the bank. Self-funding is one of them. Tap into your 401ks, use a credit card if you have a large credit reserve, or start a crowdfunding campaign (that last needs a previously existing fan base or really great marketing). 

If you're ready to get financed, let us know. We'll show you how it's done. 

BizNexus -Learn More From Our YouTube Playlist:

BUSINESS ACQUISITION

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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.

5 Reasons Why Buying an Existing Business is Better Than Starting One

Do You Want To Buy an Existing Business?

5 Reasons Why It is Better Than Starting One

There are a few reasons why buying an existing business is better than starting one. Use these tips to choose what's best for you.

Purchasing an existing business is one of the best entrepreneurship opportunities available for you to build wealth.

It already has employees who understand how to run the business. Also, your employees are everything because they're the ones that keep your business afloat.

Simply put, your risk isn't as great when you opt to buy an existing franchise as opposed to building a business from the ground up.

Take heed to these tips so that you're able to build your business portfolio.

Branding is everything, and franchise opportunities are ripe for the picking today.

You can grow your wealth by buying an existing business, and it may have advantages that are greater than you'll enjoy by starting from scratch. If you're thinking about buying a company and want to know the benefits, consider the points below. 

1. You're Taking Over a Company That Already Has Cashflow 

Purchasing an existing business is one of the best entrepreneurship opportunities available for you to build wealth. 

Generating income is always a process, and it can take years for a brand new company to become profitable. By stepping in and getting cash flow on the front end, you can strategize on how to grow the company, rather than just trying to how to make it survive. 

2. Getting Your Hands on Financing is Much Easier

Lenders don't like risk. 

When you buy a company that is already established, you dramatically reduce risk, and this makes you more attractive to financial institutions. You'll be able to get a loan with interest rate terms that are fair and affordable. 

3. You Don't Have to Get it off the Ground to Begin Bringing in Income

When you're just launching a business, you'll have to spend a great deal of money on equipment, licenses, permits, branding, legal fees, and so much more. 

Since you don't have to handle these sorts of expenditures, it frees up more money than you can re-invest into the business. This way you're focused on growth, rather than just trying to break even. 

4. The Core Customers are Already in Place

You'll also have established customers to serve and market to when you buy a franchise. 

It's much easier to expand on an established base that you have data on than trying to start from scratch. You're doing business with people that already trust your track record and understand the brand. 

You'll also inherit all of the trademarks that the company has in place, along with all of the brand equity that comes with it. 

5. It Already Has Employees Who Understand How to Run the Business

Your employees are everything because they're the ones that keep your business afloat. 

When you buy a franchise, you're also getting access to employees that are used to running the business on a day-to-day basis, and they understand the policies. It's easier to add your own influence and add new policies, rather than building from the ground up. 

Simply put, your risk isn't as great when you opt to buy an existing franchise as opposed to building a business from the ground up. This lets you begin generating money on your terms. 

Consider These Points When Buying an Existing Business

So there you have it. Buying a business can help you out in so many ways. Take heed to these tips so that you're able to build your business portfolio. 

Consider these tips when buying an existing business, and don't hesitate to check out more of our posts on taking advantage of franchise opportunities. 

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.