The Advantages of Buying an Existing Business

Buying a business

We walk you through 7 advantages that will give you some guidance.

Top 7 Reasons to Buy an Existing or Established Business:

1. An established client base

2. Branding

3. Avoid startup costs

4. Internal operations

5. Access to performance history and insights

6. An existing team

7. A proven product or service

Becoming an entrepreneur is well known for how rewarding it can be. In many cases, it can also help you generate a large amount of income.

But, you don’t always need to start your own business in order to become a business owner — many entrepreneurs choose to buy a business that already exists.

Not sure where to start? We’ve put together a guide with everything you need to know. Let’s dive in.

An Established Client Base

As you might expect, one of the primary benefits of purchasing an existing business is being able to leverage its existing client base. More often than not, acquiring new customers is something that requires plenty of research, time, and resources.

In some scenarios, it may prove to be exceedingly difficult to do so.

When you remove this factor entirely, you can place much more emphasis on the growth of your business. A factor to consider, however, is how much the existing customers resonate with the current business owner.

If their loyalty is tied to this individual, you may not see the performance levels that you anticipate.

In most scenarios, however, the transition will be smooth and you will be able to immediately take advantage of this existing client base.

Branding

Without proper branding, your business will struggle — that is simply a fact of life. Fortunately, the business that you are considering purchasing has already laid the groundwork for solid branding.

After all, the branding is likely what got you interested in buying the company in the first place.

The power of branding simply can’t be overstated. For example, let’s assume that you are looking to operate a business within the athletic apparel space.

Now, imagine you were hypothetically able to purchase Nike. You would immediately have access to some of the most powerful branding in the entire world.

You Will Avoid Startup Costs

The largest deterrent that entrepreneurs face when looking to start a business is startup costs. Depending on the industry they operate within, your product/service, etc., these costs could even be hundreds of thousands of dollars.

In some cases, starting your business might require millions of dollars in funding.

Interestingly, purchasing an existing successful business is often cheaper than starting one yourself. This is especially true if you are able to purchase a successful company that has only been around for a few years.

Internal Operations

The internal operations of an organization are essentially the backbone of the entire company. If they are not structured properly, the business will not be able to function optimally.

This could easily result in falling far short of intended metrics. In some cases, suboptimal internal operations could cause your business to struggle to stay afloat.

A successful business more than likely only reaches this point because it properly configured its internal procedures. While there are scenarios where some businesses succeed due to entering the market at the right time, most become profitable because of these decisions.

So, you will be able to take advantage of the framework an experienced business owner has laid out as opposed to creating one for yourself.

Insight Into Its Performance History

It should come as no surprise that having insight into a company’s performance history is a powerful attribute that simply can’t be ignored. Unfortunately, you will not have access to this type of information when you start your own company.

Instead, you will have to lay the foundation for your future success and hope that everything turns out as intended.

When looking to purchase a company, you should look for an upward trend in its performance. Although it might not currently be at the status you desire, if the company has been growing every year, this is a good sign.

So, keep this in mind when searching for a company to buy.

An Existing Team

It can take years and tens of thousands of dollars to assemble a proper team for your business. Additionally, failure to do so can often prevent you from reaching optimal levels of performance.

By leveraging an existing team, you can forego this obligation entirely. In many cases, you won’t even need to make adjustments to the existing team if they have been proven to produce the results you desire.

You would simply let them operate as normal and provide guidance when necessary depending on your intended metrics.

A Proven Product or Service

If you offer a product or service that has not been proven to provide value to your audience, there is no guarantee that your business will ever be successful. In the event that your business fails, you will likely find yourself in an insurmountable amount of debt, develop a poor reputation as an entrepreneur, etc.

Any business that you purchase should have a product or service that has consistently performed well over time. Not only will you be able to pick up where the previous owner left off, but you can also avoid the substantial amount of research involved in developing a product that customers will actually buy.

Deciding Whether or Not to Buy a Business Can Seem Difficult

But, it’s not as complicated as you might anticipate. With the above information in mind, you’ll be able to pursue all the benefits that you can receive when you buy a business that already exists.

Want to learn more about what we have to offer? Feel free to reach out to us today and see how we can help.

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How to Buy a SaaS Company

Buy a SaaS Company

We’ve put together 6 tips to help you out when buying a SaaS Business for sale.

6 Tips to Successfully Buy a SaaS Business:

1. Options: buy vs. build

2. Where to buy a SaaS business

3. Understand the prices model

4. Check out the source code

5. Check acquisition channels

6. Understand the competition

SaaS continues to show its dominance and is expected to generate an astounding $141 billion in 2022. If you're looking to buy a company, buying a SaaS business would be a remarkable idea.

Living in the cloud means that the SaaS model was not affected by the pandemic, making it one of the most attractive business options.

It has proven to be exemplary lucrative with very enticing options in terms of scalability. It also means that SaaS businesses are valued differently compared to most other businesses.

While buying a company is a good idea, you need to do a lot of things before buying a SaaS business. This guide covers how to buy a SaaS company and several steps you should make to ensure a seamless buying process.

Should You Buy a Company or Build One?

Why buy a company when you can just build one?

One of the most significant benefits is that you'll save time. Building a SaaS company involves building software, which takes a specific skill set that most people may not possess. It would take you a considerable amount of time to build your sass products from the ground up.

When you purchase a SaaS company, you'll not only get the software but a few years’ worths of market data as well. It will give you a sufficient baseline to work and allow you to focus on improving and scaling the business.

Consider Where To Buy the SaaS Business

If this is your first time buying a SaaS business, then you may not know where to start. You face two options, which are to buy from a private seller or a broker. You need to conduct a market evaluation.

The main difference you will face between a private seller and a broker is the vetting process.

A broker will vet numerous businesses that are trying to sell. Vetting the account is one of the most important steps you can take when you want to buy a company, so decide whether you want to jump into the numbers or have a broker do it for you.

Having a broker doesn't necessarily mean that you should overlook your due diligence. It means that they will take the weight of the load from you, and all you have to do is verify what they bring to you.

If you choose to vet yourself, you'll find that most businesses offer screenshots of their account to back up the traffic and revenue claims.

This proof should not be enough, though, and they should grant you viewing permission to their analytics accounts. These accounts will show you whether the valuation matches the business performance.

You should also ask to see the profit and loss statement and any other additional expenses you should know about before you buy a company.

Some people purchase SaaS companies with seemingly good revenue figures but later realize that the high expenses involved lower the net profit. You can catch problems that you may be able to fix. For instance, you could eliminate SEM advertising if you're good at organic SEO.

Understand the Pricing Model

Once you identify where the money is coming from and the strengths and weaknesses of the business, you should understand its pricing model. A SaaS business’s pricing model can be the difference between having no subscribers and millions of them.

There are several SaaS pricing models available. The payment option can be Monthly Recurring Revenue or Annual Recurring Revenue.

Monthly Recurring Revenue is usually the preferred method because it requires low payments up-front to new customers, and it's easier to track business performance.

One of the most significant results for you to conduct a thorough review of the market is to look for opportunities. Besides checking the SaaS company’s legitimacy, market opportunities will play a huge role in your business’s future.

Decide whether you would like to change it from a flat fee system to a tiered system instead. Such a move will make it more appealing to your target market and, in turn, speed up your ROI.

Check how many active subscribers the software has, then look at the churn rate and the customer lifetime value. It will give you a better idea of how the company works. Check how many free users are involved and whether you can offer them low-tier payments to generate revenue.

Check Out the Source Code

The source code is arguably the foundation of a business. A robust source code technically means the product will last a long time. If you don't have the technical capacity to assess the source code, it's prudent for you to hire a professional that does.

The source code is usually the owner's property and doesn't belong to the developers who created it. You must ensure the source code is included in the sale and transferred to you after the sale.

Check Acquisition Channels

There are several ways a SaaS company acquires customers, and they include paid advertising, organic search, social, referral, and direct. SEO and paid advertising are the primary sources of traffic, so scrutinize what the current owner is doing and how you can improve it to increase your business opportunities. Check if a domain is included in the sale to use the website to get traffic.

Understand the Competition

Buying a company means buying a share of the market, so get to know the companies you'll be sharing the market with. Check their marketing, pricing, and what they offer their target market. Scrutinize how they differ from what your software offers and look for an angle that offers you marketability.

Ready To Buy a SaaS Company?

There are so many reasons to buy a SaaS company, and this is the process you should follow to get it done. Do your due diligence to verify everything before you make the final decision to buy a company. You should also know when to walk away from a deal that doesn't seem appealing at all.

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What Is a Business Broker? How to Hire the Right One

Hire a Business Broker

Here are 7 tips to best choose and hire the right business broker.

7 Tips for hiring a qualified business broker:

1. Rely on referrals and ads

2. Dedicated practitioner

3. Experience

4. Industry knowledge

5. Public reputation

6. Professional connections

7. Likable

The selling and buying of businesses in the United States are more common than you may have thought, with 10,312 businesses changing hands in 2018 alone. 

The reasons people decide to buy or sell businesses are varied. It could be that changes occurred in your life in the last year or that you simply want to take a new direction this year. Whichever the reason, selling or purchasing a decision is among the biggest decisions you’ll ever make.

Whether the outcome of the transaction is a successful one depends on your business broker. But what is a business broker? More importantly, how can you hire the ideal business broker for you?

If you’re asking yourself these questions, you’ve come to the right place. In this article, we tell you all you need to know on how to hire a business broker.

Read on to learn more.

What Is a Business Broker?

A business broker refers to a trained individual or a professional agency whose role is to aid the sale or purchase of a business. Primarily, business brokers help their clients secure the best price for the business. They’re also responsible for submitting the appropriate paperwork and completing the needed permits or licensing.

As you’re going to find out, the whole process of transferring the ownership of a business can be lengthy and complicated. That’s why it helps to use a business broker, especially if you’re the seller.

A business broker can suggest a realistic price value for your business and properly advertise it for sale. They can also screen and interview potential buyers. A seasoned business broker will also help you in properly preparing your business for sale.

If you’re the one considering buying a business, a business broker can help evaluate the businesses you’re considering. They will also get the cash flow statements and financial statements of those businesses so you can make an informed decision. 

A good business broker will also help you secure financing, besides holding negotiations with the seller on your behalf.

Tips for Hiring the Best Business Broker for You

Now that you know when to get a business broker and have seen what such a professional can do for you, it’s time to look at how you can get the best one for you. Read on for practical tips on finding a great business broker. 

Rely on Referrals and Ads 

One of the best ways to find a business broker is through referrals from trusted contacts. Your friends, relatives, or colleagues may be able to recommend a business broker they’ve worked within the past.

You can seek out brokers in the business sections of major newspapers. Narrow down on two or three suitable candidates and interview them.

Choose for a Dedicated Practitioner 

During your interview, find out whether the business broker practices full-time or part-time. A dedicated practitioner can add a lot more value to the sales transaction as they’re likely to have a larger network of contacts. 

Where you’re selling a company worth millions of dollars, it’s best to work with an acquisition or merger intermediaries. 

Ask About Experience  

Industry experience is a great asset in any profession. Inquire how many years your prospective business broker has been in the industry. Sure, everyone starts somewhere, but when you’re engaged in a transaction as sensitive as the sale or purchase of a business, you don’t want to work with a newbie.

But it’s not enough that the broker has been in the industry for years if they’ve only executed a handful of deals. Work with someone who has successfully helped a considerable number of business buyers and sellers seal deals.

Consider Industry Knowledge  

Top business brokers will usually have worked with a variety of businesses. However, most successful brokers develop a liking for particular types of businesses or industries over time. 

Don’t hesitate to ask what particular types of businesses your prospective business broker handles regularly. If you’re looking to buy a SaaS company, working with a broker with industry knowledge on such businesses can lead to a better outcome for you.

Assess Their Public Reputation

If someone recommended the broker to you, it’s a good indicator that you’re going to have a great experience working with the broker. But if you found the broker through an online search or newspaper search, it’s a smart move to learn more about their reputation. 

So, how do you evaluate a broker’s reputation? The first place to start is online. Read online reviews to find out what people say about the broker.

You could also ask for a list of previous clients from the broker during your interview. Follow up with two or three of those clients to what they say about the broker. If past clients generally seem happy with a business broker’s services, it’s a good sign that you, too, will love working with them. 

Inquire Whether They Have Connections  

Besides the business broker, you’ll need other professionals to help you along this journey. These include accountants, attorneys, bankers, and others. Finding a business broker who has connections with such professionals means that you won’t have to spend time and resources finding them on your own.

Of course, not all great brokers network the same way. However, a broker without a professional network tells you a lot about how they do business.

Consider Likeability

You’re not looking for a spouse in your broker, but you’ll be working together for months. The transaction you’re undertaking together is an intense one and involves highly personal matters. That’s why you want to gauge from your initial meeting whether things are going well between the two of you.

If you and your broker do not seem to be getting along well during your interview, it could signal challenges on the road ahead. It’s best to move on to the next potential broker.

Find the Right Business Broker for You

Hopefully, we’ve aptly answered your question, “What is a business broker?” Given how significant this professional will be when you’re buying or selling a business, it’s critical that you hire the right one for you.

Are you interested in the services of a reliable business broker in your area? Get started today.

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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.

Why Use Seller Financing to Buy a Business

Buying a Business?

Here are 5 questions to consider finding answers to when buying a business through seller financing.

5 Questions to consider when buying a business through seller financing:

1. What is The Meaning of Seller Financing?

2. How Does Seller Financing Work?

3. What are The Benefits for Buyers?

4. What are The Benefits for Sellers?

5. Is Seller Financing Safe?

In 2018, the number of businesses bought and sold passed the 10,000 marks.

If you're looking for a business to buy you have several options. 

One of those options is using seller financing to buy a business. It means that even if you don't have enough money to pay the full price upfront, you can still buy the business you want. 

Read on as we take a look at the ins and outs of using seller financing.

What Is Seller Financing?

Put simply, seller financing is when there seller finances some of the cost of buying the business.

It's a bit like the buyer taking out a loan to fund part of the purchase, but the loan is from the seller rather than a financial institution. In effect, the seller is loaning the buyer some of the money to buy the business and will receive this money back with interest over an agreed period.

How Does It Work? 

First, both parties have to agree to use seller financing for a portion of the sale of the business.

The buyer will usually have to provide financial information to the seller to prove that they can afford the loan repayments. The seller may also ask to see evidence that the buyer has the business experience to keep the business afloat while paying down the loan. This could be in the form of a business plan. 

The seller will probably also look at the buyer's credit history. If any of the information provided gives the seller cause for concern, they are within their rights to refuse the sale. This is similar to the process that you would go through when taking out a loan with a bank, for example.

Once the seller approves the buyer, a contract will be drawn up laying out the amount of the loan, the interest rate, the repayment schedule, and any collateral requirements. It is also very likely that there will be a clause stating that if the buyer does not keep up repayments on the loan, they will forfeit ownership of the business. 

Benefits for the Buyer

The most obvious benefit for the buyer is that it allows them to buy a business without needing to have the full asking price available to pay upfront. 

With less money paid out upfront, and manageable monthly payments, this gives the new business owner more leeway with their cash flow which can then be used to help the business grow. In addition, seller financing usually leads to a quicker sale as there are fewer hoops to jump through than there are with the banks.

It may also be the case that a buyer is more likely to get financing by this method, as sellers may not have such strict financial requirements as financial institutions do. Sellers may offer more favorable rates of interest than the banks can offer, too. 

Also, the seller has a vested interest in seeing the business succeed so that they receive all of the money and interest that they are owed. This means that are more likely to be open to offering advice and guidance to the new owner about how to help the business grow.

Benefits for the Seller

This all sounds great for the buyer, but why would a seller want to lend someone money to buy their own business?

Well, for a start, it opens you up to far more buyers. Buyers who may have the perfect experience to make your business success may not meet the requirements for a bank loan. Offering seller financing gives you a much wider choice of buyers so that you can find the right fit.

Another major benefit is that you're taking an interest in the amount that you lend. That means that your money is going to work for you. You may also be able to sell at a higher price and much more quickly than you could otherwise.

There are also tax benefits. Instead of paying tax on the full sale price of your business, your gains become incremental allowing you to spread your tax burden out over a much longer period. 

Is Seller Financing Safe?

There are risks involved in seller financing, but the vast majority of these are on the side of the seller. 

The biggest risk is that the buyer is unable to keep up repayments on the loan. The seller must then begin the process of taking back ownership of their business or trying to recover any outstanding payments. It may be the case that the business you repossess is no longer worth as much as when you sold it.

The seller also receives less money upfront, so if they are thinking of investing in another business, they have less capital with which to do so.

On the whole, however, the process is a good deal for both sides. Provided that the legal documentation is drawn up correctly, and the seller is diligent in choosing the right buyer, seller financing can benefit everyone.

Are You Thinking of Using Seller Financing to Buy a Business?

If you're thinking of using seller financing to buy a business then we're here to help. 

We can match you with your perfect cash-flow positive acquisition opportunity from our inventory of thousands. Once you've found the perfect match, you'll seamlessly connect with the seller's intermediary, eliminating any wasted effort or time.

Sign up, set your preferences and our algorithms will do the rest.

Find a Business For Sale Now

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Benefits of Starting a Business vs. Buying One

Buying vs. Starting a Business

We put together 7 benefits to share with you on starting vs. buying a business

7 Benefits to Starting vs. Buying a Business:

1. Market Research Benefit when Buying a Business

2. Starting a Business Gives you Meaning and Skin in the Game

3. Faster Track when Buying a Business

4. Starting a business can be built on your personal preference and liking

5. Take Advantage of an Established Brand when Buying a Business

6. Acquiring an Established Business Gives you Access to More Capital

7. Building a Business Allows you to start your own Team

When you are interested in growing your wealth, it means building streams of income. Nothing builds income like becoming a business owner.

There are two tracks for owning a business -- either you build one or buy one. Both are attractive options, depending on what you want and what industry you're in.

Keep reading so that you can learn the benefits of starting a business, compared to buying one.

1. Buying an Existing Business Gives You the Benefit of Market Research

When you're weighing whether to run a new or existing business, consider your risk tolerance. If you want more of a sure bet, buying a business gives you the benefit of market research.

The company that you buy out can hand over documented research and analytics that you can immediately assess and build on. You'll also have built-in successes and failures to learn from, which will let you retool and leave your own mark on the business.

2. Starting a Business Gives You Meaning and Skin in the Game

Starting a business is often a heart-centered decision. For many people, starting their business is tied to finding their "why", which adds to the investment and meaning of the journey.

When you build your company from scratch, it has a large measure of meaning, and you'll feel compelled to fight your way through adversity. People often start businesses when they start thinking about legacy and long-term wealth.

3. Buying a Business Lets You Get Started Quicker

Consider your timetable for getting started. If you are interested in getting in the driver's seat sooner, purchasing an existing business is your best option.

When you're able to start your business quickly, you'll be more likely to make your company productive and profitable. It gives you a swifter return on your investment and lets you begin hitting benchmarks.

4. When You Start Your Own Business, You Build it Perfectly to Your Liking

Starting vs buying is an easy decision if you're big on customization. Building a business to your liking lets you control things down to the last detail.

When you decide to start your own company, you get to see an idea in your mind go from journal entries and vision boards to concrete plans, to a living, breathing reality and source of income. This is a reward in itself, and it gives you the courage and confidence to make other moves in your business life.

5. You Can Take Over an Established Brand

There's no substitute for piggybacking off of the work that someone else already put in. When a brand is trusted and established, you'll be able to quickly build a rapport with their customers.

This is why purchasing a franchise is such a common way that people begin building their wealth.

Being able to use the logo and trademarks of a company that people already trust and identify with gets you, customers, day one. This way, you'll be able to focus more on the work at hand and less on marketing and trying to draw new people in.

6. Purchasing an Existing Business Gives you Access to More Capital

The bank is always more willing to bet on the established brand. If you know that you're going to have to seek lending, you'll have a better chance of getting the funding that you need when you're purchasing an existing business.

When taking over someone else's company, you'll be able to present the bank with financial records for the past several months or years. An existing company also has assets that can be used as collateral.

The risk is lower for the bank, which means that the terms that you receive will also be more reasonable. By taking on a loan that you can easily repay, it frees you up financially to accomplish your goals for both the short-term and the long-term.

Make sure that you explore plenty of options when you're trying to find new lending opportunities.

7. Building Your Own Business Lets You Start Your Own Team

Consider what you are hoping to get out of business ownership. If you're a people-oriented entrepreneur, you will definitely want to put some thought into the team that goes on this journey with you.

When you're building your own company, you'll have more control over who is working for and with you. Taking over an established company is more difficult in this regard since teams are already in place from top to bottom.

By starting your own company, you'll be able to instill a company culture that carries on for years to come. You will know that you left your imprint on the business and that you had a strong influence on its direction and success.

Consider the Benefits of Starting a Business vs. Buying One

When you're thinking about the benefits of starting a business, the tips above will be helpful. Becoming a business owner is a dream that many people have. It's something that you can achieve as long as you have the right information and the willingness to follow through.

These points give you a glimpse of what's possible so that you can then decide which track you want to take. Whether you decide to purchase a business or start your own, make sure that you put together the best team of professionals, and seek help from those who have been in your shoes.

For more advice on buying a business and making entrepreneurial decisions, check out more of our blog posts.

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Becoming a Business Owner: 7 Key Benefits of Buying a Business

When it comes to buying a business, 90% of potential buyers fall through. It's an extraordinarily high number, and there are various possible reasons.

People become obsessed with the idea that the business might fail, or find too many risks. The truth is though, no business is perfect.

However, becoming a business owner of an already established company can be far better than starting your own in many ways. Don't back out because of some trivial reasons — it's time to go for it.

If you're wondering about all of the advantages of buying a business, here they are! 

1. It's Low-Risk Compared to Starting a Business

When buying an existing business, there's generally less risk.

If you're starting your own business rather than investing your time and money in an existing business, the risk factors can be pretty huge. Many businesses fail fast and unfortunately, when starting a business, it's very hard to predict if it will be successful or not. Very promising business can flop.

An established business has already been through the risky first couple of years and made it out the other side. Presumably, they've already met a lot of their business goals and are generating a healthy profit.

By buying an existing business, you're skipping the initial risk period. 

2. There Are Established Relationships Already

Regardless of what the business offers, whether it's a service or a product, there are usually established relationships with clients or customers.

They already know the business works for them, and they're ready to use them.  

Although you'll want to continue to grow the business by going out there and finding more clients and customers to welcome into the fold, starting off with that base can be extremely helpful. There's no need to struggle for a few weeks or months as you try to find people to help — your starting base is already there. 

3. You Might Have a Solid Staff Team

There's probably a staff team already working for the business. Takeovers can be tricky in that not everyone is always happy about them, but if you put your best foot forward, it's likely to go smoothly. 

After all, this staff team is likely already invested in the business. 

The staff team will have been there for a while, which means they already know what they're doing. This can cut training and hiring costs, since if you need to hire anyone new, it'll be far fewer people than if you had started a business on your own.

New business owners developing a good relationship with an existing staff team is vital and will pay off in the long run.

4. Learning Something New

When buying a business, you might know the business and financial world well, but not the industry you're coming into.

For example, you might be entering the pet industry or the gaming world, but have no idea about either of those things.

That doesn't mean you're going to be a bad owner! It just means you're going to learn something new and gain experience in a new industry, which is invaluable.

Let the staff teach you about everything you need to know while you impart business wisdom. 

5. You Still Have Creative Freedom

One thing that scares new business owners is that they'll have no creative freedom. By coming into an established business, they assume it's set up a specific way, and they won't be able to change anything. Understandably, that can be frightening to those who like to make their own mark on things.

This, however, isn't true!

Staff and clients alike will welcome improvements. This isn't to say you should come in and change everything in one shot, but you'll be welcome to put your own stamp on the business if it improves it.

You likely already have ideas if you went ahead with buying the business, so don't be shy to do it — although it's always wise to seek feedback first. 

6. It's Less Work

In general, it's less work at the start. If you own multiple businesses or have another job, this simple fact might be what persuades you to buy an existing business. 

You can skip out on:

• Hiring and training staff

• Working to establish the business

• Finding those initial clients

• Designing the website from scratch

• Experimenting with what works for the business

You can make changes to all of these things, of course, but the solid foundation being there will make a huge difference. 

7. It Likely Has an Established Reputation

Not only will it have a staff team and established clients, but it might also already have a reputation in that industry!

If the website is drawing in a good number of hits a month, or the client base is big, this is likely the case. No need to build the business up to be highly respected when the respect is already there — all you need to do is maintain it by carrying on with what they've been doing and putting your own mark on things. 

Becoming a Business Owner This Way Might Be the Smart Choice

Becoming a business owner can be daunting in any scenario. However, buying a business from scratch involves a risk period and a lot of time and effort investment that buying an existing business doesn't. 

If you've been afraid to buy a business, it might be time to take the leap. Don't look for the perfect business — look for the business that's well on its way to being so, so you can push it for the final few steps!

Looking to buy a business? We can help — let us match you with one today. 

8 Things You Need to Know Before Buying a Franchise

Buying a Franchise?

Here are 8 things you need to know before you dive in.

What are the 8 Things You Need to Know Before Diving in Buying a Franchise?

1. Experience

2. Industry

3. Fees

4. Capital

5. Chance of Success

6. FDD - Franchise Disclosure Document

7. Territory

8. Training

Are you thinking of buying a franchise? Well, we don’t blame you! This is one of the most successful business models of the last century, with 785,000 franchise establishments operating around the US today.

One reason for this massive popularity is the array of incentives on offer for budding entrepreneurs. From leveraging the products and influence of established brands to accessing marketing and operational support, you can sidestep many of the usual problems start-ups face in the search for success.

Owning a franchise isn’t all hunky-dory though! What ordinary start-ups lack in experience, authority, and market share, they make up for in flexibility and control over their business. By contrast, franchisees operate under tight regulations dictated by the brand and pay for the privilege of using their brand name.

For these reasons, it’s important to learn more about the pros and cons of owning a franchise before signing any dotted lines. Do you want some help with that endeavor? Keep reading to discover 8 key things to think about before buying a franchise.

1. The Experience

Our first suggestion is to find out as much as you possibly can about the reality of owning a franchise. You could even go and work for one first! You’d learn what it’s like, how they operate, what challenges they face, and how much support they receive.

At the very least, you should research and talk with current franchise owners about their experience. Having this solid grounding in franchise ownership would help in two ways: first, you’d recognize whether or not it’s something you’d enjoy doing; second, you’d glean vital insights into the processes, pitfalls, and perks involved.</p>

2. The Industry

Think about your personal interests, skillsets, and experience levels too. A particular franchise might seem like an amazing business opportunity. But it could turn into a nightmare venture if you dislike the industry and/or have no experience in it.

Good things happen when passion and skillsets align. You’re onto a winner if you can find a franchise in a field you both like and have prior experience in. Take an honest look at your strengths and weakness to decide if the franchise in question ticks those boxes.

3. The Fees

A full understanding of your financial obligations as a franchisee is crucial as well. After all, the initial franchise fee will only be the beginning. You can expect to pay ongoing royalty fees too; some franchisees even have to pay out for marketing, training, and opening day giveaways.

Don’t be caught unawares! Investigate every single cost involved beforehand so you can decide whether or not it’d be a viable business opportunity.

4. The Capital Requirements

Those fees aren’t the only overheads you’ll have to cover as a franchisee though. Like any business, you’ll be buying inventory and paying utility bills, wages, start-up costs, and so on. That’s why it’s important to a) understand how much capital you’ll need in advance and b) have enough of it in the bank to mitigate the financial risks!

Likewise, regardless of the brand in question, it could take some time for your franchise business to be accepted in the community. Make sure you have a sizable financial buffer to weather this initial slow period until the franchise is fully up and running.

5. The Likelihood of Success

Starting a business on a whim rarely ends well. You need to assess the market, identify the demand (and competition), consider potential future obstacles, and, ultimately, determine the likelihood of running a profitable business. Alas, that last part’s often easier said than done for franchises.

Why? Because what works for one franchisee might not work for another!

Success depends on myriad factors, not least of which is an establishment’s location (and both the culture and demand therein). A franchisee’s personal connections make a difference too. Nevertheless, try to work out how many people have had success with a particular franchise, how they accomplished it, and how many failed to try.

6. The Franchise Disclosure Document (FDD)

The FDD is another pivotal piece of the puzzle. This document will tell you everything you need to know about the franchisor and its system- not to mention your potential requirements as the franchisee. Details about territory (more on this coming up), pricing guidelines, products, and various money matters are all included inside.

You must read the FDD cover to cover, understand the terms, and feel happy with the restrictions you’d have to operate under. Avoid signing up for anything that you either don’t understand or have significant reservations about.

7. The Territory

Start researching franchise ownership and it won’t be long before you come across talk of territory. Outlined in the FDD, your ‘territory’ is the area in which you can legally operate and serve customers. It’s imperative that you

1. define your territory clearly

2. choose properly based on size, population density, and setting and

3. avoid or plan for overlap with a competitor’s territory.

Likewise, how many territories, if any, does the franchisor expect to incorporate in the coming weeks, months, and years? How many are in place already? And what are their rules around competing when multiple franchisees operate in the same area?</p>

8. The Training

The best franchisors understand that their success is tied up with the success of their franchisees. As a result, they’ll invest in their learning and be proactive in their development from day one. It goes without saying that these are the organizations you want to buy into.

That’s why you should try to uncover the franchisor’s reputation (and the support they have on offer) before signing any franchise agreement. Inquire about any training opportunities that provide, hands-on assistance they deliver, and so on.

Remember These Factors When Buying a Franchise

Franchising is a hugely popular business model in the US and around the world. And for good reason! It offers a wide range of advantages to everybody involved, allowing entrepreneurs to ‘piggyback’ on the success of established brands.

But that doesn’t mean you should sign any old franchise agreement without thinking it through first! As we’ve seen, this is a big commitment that demands due diligence and insight to ensure you attain the success you deserve. Would you like professional support acquiring a franchise without the fuss of going it alone?

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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.

From the Trenches - Interview With California Business Broker Randy Hendershot

Randy Hendershot

Current market perspective from the trenches of the business acquisition & sale industry

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Sit-Down Interview With Business Broker Randy Hendershot

What are your thoughts on where business acquisition & sale market activity is heading over the next 3-6 months?

If the last quarter of 2020 is any indication of business for sale activity in 2021 the marketplace will be very active. Both individual and strategic buyers are looking for strong businesses to acquire.

Due to the Pandemic, we are seeing quite a few buyers looking to exit the corporate world and become their own boss.

What do you see as the most significant SELF-IMPOSED threats out there that could hurt the market for business acquisition & sale and small business activity in general?

Business owners need to continually update their monthly financial records keeping them current and in order for buyers to have a complete understanding of the business.

We also continue to see examples of high customer concentration issues creating challenges for buyers to move forward with a purchase.

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What Makes Evolution’s Approach so Special?

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What do you see as the top three things the government needs to do to support the main street business acquisition and sale opportunities for small business owners through the remainder of this year?

1. Allow small businesses to make their own decisions in creating an environment in their business that makes customers feel safe. If they do this customers will return. I have the utmost faith in entrepreneurs in that they will figure out how to be successful during the Pandemic.

2. Provide financial assistance options if need be for qualified businesses.

3. Stop changing the rules weekly and monthly on how businesses need to act during the Pandemic.

What do you see as the top three reasons to BUY a business in 2020?

1. Take control of your future by being your own boss and not relying on someone else.

2. Banks are eager and willing to lend in this environment with reasonable rates.

3. Automotive Service shops continue to perform well during these hard times here in Northern California.

What are some of the questions a business owner should ask when choosing an advisor to help buy a business or work on exit planning to help navigate through this challenging stretch?

Sacramento and Bay Area business owners should dig into the details on how a business broker will market their business to find buyers.

Other than the numbers, which are very important, how will a business broker "package a business" to help buyers understand the true story of the business?

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3 Value-Wasting Mistakes to Avoid When Hiring a Professional Business Broker

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How would you rate the current political environment related to small business growth, business acquisition & sale?

2/5

What are your thoughts on transaction terms for buyers & sellers in the current market?

We are seeing buyers seeking to have more of a percentage of seller carry in business for sale deals in the Northern California market place.

The main reason is the "unknown" as we navigate forward in the Pandemic. The challenge is showing buyers how the business is performing during these times compared to pre-Covid-19 times.

A month by month comparison for 2020 compared to 2019 is a must to help tell the story.

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Why Should I Hire a Broker?

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Thoughts on business valuations in today's market?

The key to valuations in the current Sacramento and Bay Area market place is how fast a business comes back to pre-Covid-19 times.

If a business is getting back to normal, valuations will most likely remain close to the pre-Pandemic times, yet the terms will most likely be more risk-averse for buyers.

Businesses still affected by the Pandemic may be hard to sell and if so will most likely see a drop in the sales price. If your business is performing better during the pandemic you may see some increase, but more likely have much more buyer interest which can help with both price and terms.

Marketing The Deal - Interview With Cleveland Business Broker Brad Ruth

Brad Ruth

Current marketing the deal state of the business acquisition & sale industry

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Sit-Down Interview With Business Broker Brad Ruth

Talk to me about the marketing process for marketing a business for sale… What are the top considerations a business broker needs to manage well?

I market my businesses on my company and personal LinkedIn profile, business Facebook page, company website, BizNexus, and BizBuySell. I have an email list of about 650 active buyers that have expressed interest in businesses I have sold in the past. As a broker, it is important that I respond quickly to interested buyers with a link to NDA and a phone call.

Where do you see sellers typically fail when marketing their own business for sale?

Sellers typically do not have a strong network and they should be concerned about keeping the sale confidential.

What are your favorite tools & platforms for marketing a business for sale?

1. LinkedIn

2. Email Marketing.

3. BizNexus

4. BizBuySell

How many buyers do you typically want to have bid on a deal you represent?

It just depends on the business, but usually 2 or 3.

Anything else? What’s special about your particular marketing strategy for sellers in this market?

I believe I am more active on social media and I have an extensive list of active buyers that I stay in touch with. This is definitely an area I can always improve.

Why Start a Business When You Can Buy a Business?

So you want to run your own business

Why not buy a business instead?

6 Reasons on Why Buy a Business

1. You have a foundation.

2. You have a brand.

3. You have a market.

4. You have a problem-solving process in place.

5. You don’t need startup funding.

6. You already have a team.

Buying a business can be better than starting a business. 

If you buy a business, you sometimes know that there is a proven business model. You know that business has had success, that there's profit with the business. 

If you're unsure of buying a business because you want your own foundation, then you should consider the benefits of buying a business. You should consider how it gives you a headstart on everything. 

Here's a guide on why you should buy a business instead of starting your own business. 

There's Already a Foundation

One of the benefits of buying a business is that there's already a foundation. There's often less work when it comes to buying a business. 

You don't have to worry about creating a marketing strategy, have a business plan, or finding a building to house your business. You may already have the employees you need to continue with the business. 

The great thing about buying a business is that you aren't starting on step 1, you are starting on step 5. 

Here's a more detailed look at why buying a business can be more beneficial, giving you a head start on revenue. 

You Already Have a Brand

If you start a business, it can take a while to build a brand. People don't know about your business or how you can help them. Building a brand takes time because it requires marketing and building a customer base. 

But when you buy a brand that's a part of a business, you already have an existing market that knows how you can help them. 

You already have a story that resonates with people. You know what benefits them. 

Buying a brand also means that you already have predesigned logos and other signage that represents your brand. 

You Already Have a Market

Buying a business also means that you already have an existing market. You don't have to figure out who your ideal buyer is. You already know everything about them and how you can help them. 

When you buy a business, you don't have to worry about attracting new customers because you already have loyal customers who know everything about your business. 

You know the demographics, their age, what they like to do, and how to solve their problems. These are some of the challenges you would have to consider solving if you were starting a business. 

When you buy a business, you only need to make minor adjustments to your target market. If the business you are buying is struggling, you may have to do more research on your target market, but the most essential information should be there. 

You Know How to Solve the Problem

If you're buying a business that is struggling to attract new customers or has other problems, you may find that it's a problem you can solve. 

You may see an opportunity in a business that is struggling. This can sometimes make it more of a profitable opportunity than starting a business. 

Another problem you are solving is having fewer competitors in your industry. If you were to start a business, you would have so many competitors. But buying a business means you have to compete against one less. 

You Don't Need Financials to Get Your Business Started

Whenever you start a business, you need a market analysis and a detailed financial plan. It should outline your 6-month and 12-month revenue goals. 

If you buy a business, you don't have to worry about the financials as much. While you still need a financial goal, you don't need to start from the very bottom. The business you are buying should already have an idea of how much they are making each quarter. 

The business you are buying should tell you profit margins, what's selling, what's struggling, as well as other financial plans. It can give you an idea of if you want to buy that business or if you want to pass on it. 

The final financial benefit you should be aware of when you buy a business is that you have immediate cash flow. You don't have to wait for customers to find your business and start buying. 

Everything should already be in place for you to make money. When you take over a business, the goal is to make changes so you can increase that cash flow. 

You Already Have Employees

The final benefit of buying a business is that you already have employees. While you can choose to bring your own team in, it's not something you have to rush. 

You can choose to evaluate the current employees and train them on new policies when you take over a business. It's not something that you have to rush when you buy a business. 

It can also make running a business easier instead of starting a business because you already have a team in place that knows their role. You don't have to hire from scratch. 

Now It's Time to Buy a Business

Deciding to buy a business can be still challenging, but it's sometimes far less challenging than starting from scratch with starting your own business. This is why it's important to consider the benefits of buying a business. 

When you understand how most of everything is in place when you buy a business, you realize how much easier it is. However, it's important to remember that you still need to do your research on what business to buy and see how much revenue they are producing. 

If you're considering buying a business, you can get matched with the perfect business here on our website. You can also start identifying your existing market.

Most related post handpicked for you - read on…

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.

8 Insider Secrets To Buying a SaaS Business

Software as a service (SaaS) is booming

Do you want to hop on the train?

Here are Eight Secrets to Buying a SaaS Business:

1. Check for product profitability.

2. Check industry growth level.

3. Identify potentials.

4. Understand why the business is being sold.

5. How good are the competitors?

6. Can you bring your own team.

7. Are there any lawsuits or legal disputes?

8. What is the company’s reputation?

Buying a SaaS company can be a brilliant idea. 

If you're considering buying a SaaS company, you may find that there's a lot of potential in these businesses. You'll discover that you can make a lot with SaaS. 

Of course, there are a lot of factors that go into buying a SaaS business. You have to consider what it means to buy a business in this industry around software and tech. You have to consider the market and how profitable your niche is. 

Before you dive into buying a SaaS business, you need to know the eight insider secrets to buying one of these businesses. 

It can help you find a SaaS business that is profitable and worth buying. 

1. Is the Product Profitable? 

One of the main things you should find out about is if the SaaS business is profitable. You should see if the product they are selling is profitable. 

It can give you an idea if you can produce a similar profit if you were to buy the business. 

One of the ways to find out if the business is profitable is to look at the businesses' financials. You are assessing the financial risk of buying a business that is either making a profit or not. You are also looking at the profit margins. 

The profit margins can be an indicator of how much the business is making after they pay for overhead. Don't be afraid to ask the owner for the financials if you are considering buying their SaaS business.

2. What's the Industry Look Like in the Next Five Years? 

Another secret to buying a SaaS business is figuring out what the industry looks like in your specific niche.

There are various kinds of SaaS that range from customer relationship management to accounting software and email software. If you are considering buying a particular SaaS business in, for example, customer relationship management, you need to figure out what that industry looks like in five. 

You don't want to buy a business that is behind the curve and has limited potential. 

3. What's the Potential? 

When it comes to potential, you need to figure out the possibilities for the SaaS business you want to buy. 

Even if the business you want to buy has low-profit margins, you may discover that the company has a lot of profit potential. There's potential in marketing and branding the business. 

4. Why Is This SaaS Business Getting Sold? 

Don't be afraid to ask a business owner why they are selling a business. 

It could be that they are in legal trouble; they aren't making a profit or something else that is forcing them to make a sale. You don't want to inherit that kind of trouble. 

When you find out why a SaaS business is for sale, it can give you an idea of if you should proceed forward with putting an offer on that business. 

5. How Much Better Are Your Competitors? 

Another secret to buying a SaaS business is finding out about competitors. 

If the competitors of the SaaS business you want to buy are formidably and astronomically better in every area of business, it could make it hard for you to compete with them after you buy the SaaS business. 

However, if you discover that the SaaS business you want to buy is staying competitive and considered one of the best, then it's a good business to invest in. 

6. Can You Hire Your Own Team? 

Sometimes buying a business comes with stipulations. 

For example, if a SaaS business owner wants their business and makes sure the employees are kept on, it could be something non-negotiable. 

This is something you want to find out before you purchase a SaaS business, especially if you want to bring your own team along. 

7. Are There Any Lawsuits?  

If there are any pending lawsuits against the SaaS business you want to buy, it could put you in a sticky situation. You could be inheriting those lawsuit issues that make it difficult for you to run your business. 

You want to make sure you do your due diligence and find out if there any legal issues the business is facing. 

In addition, you also want to make sure the business isn't doing anything unethical. If you buy a business and find out there are some illegal activities being done; it can be done against you. 

8. What Is the Company's Reputation?  

The final secret about buying a SaaS business is figuring the SaaS company's reputation before buying it. 

You want to see what people are saying about the SaaS business on Google and other kinds of reviews. It can give you an idea of if people have a positive or negative perception of the business you are about to buy. 

If people have a negative view of the SaaS business, it can be more difficult for you to change that perception after you've bought the business. 

Now You Know Everything About Buying a SaaS Business

When it comes to buying a SaaS business, you need to know everything there is to it. These secrets can give you insight into making the best decision. It can guide you when you are finally ready to buy a SaaS business. 

It's important to remember, however, that you should be patient when you do buy a business. You shouldn't rush into something because it has a good price tag. You should ask these questions, so you don't end up buying a bad business. 

If you are thinking about buying a business, you can visit our website and see how we can help you. 

Most related post handpicked for you- read on…

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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.

How to Use Seller Financing to Buy a Business: A Guide

Need some help getting the funds?

Check out this guide on how to use seller financing to buy a business.

Here’s What We Are Covering:

1. Advantages of buying a business.

2. What to look for when buying a business.

3. Using seller financing to buy a business

4. Learn the 5 steps to seller financing.

5. Benefits to seller financing.

6. Finding a business to buy.

You may have an entrepreneurial spirit and dream to own your own business. Now for the next step: how to turn that vision into reality?

You may begin to research different options. A startup involves a substantial initial investment of time, energy, and resources. It could be a while before you see any return on investment.

Another avenue is to buy an already established business. Finding a business will involve some legwork and talking to people in the industry, but the business has proven its viability in the market.

When it comes to acquiring a business, you have some additional financial options. Unlike a startup, which would rely on your own investment, investments from others, or traditional financing, you have another option of seller financing to buy a business that already exists.

Advantages of Buying a Business

There are some obvious advantages to buying a business, such as acquiring an existing customer base. This could otherwise take you years to establish. 

With an existing business, you will know the profits of the company. You may even be able to take regular draws or salary, which would be far less likely in a startup.

You would also be acquiring an existing operation. The business may have employees that would be retained after the acquisition and be a valuable asset going forward. This is much simpler than building the operation from scratch with a startup.

What to Look for When Buying a Business

Your steps in buying a business will usually involve three phases: search, negotiation, and closing the transaction.

As you begin your search, you will want to ask yourself the following questions about any business that you would consider buying:

• Why is the business for sale?

• What is the reputation of the business?

• What are the profits of the business?

• Do you think you can increase profitability?

The process of buying a business can be complex. You should use a business attorney to review the deal structure and an accountant to review the bank transactions, financial statements, and tax returns.

You should inspect the assets, such as any offices, storefronts, or equipment. Note the condition and cleanliness of these, as they reflect on the owner's care. You will also want to review any liabilities that the business has, including pending judgments or lawsuits that may not appear on financial records.

Once the deal's negotiations have been completed, you can move to the final phase and close the transaction. This is where funding will come into play.

Using Seller Financing to Buy a Business

When you use seller financing, the seller is essentially acting as the lender. A majority of small to mid-sized business acquisitions involve some kind of seller financing.

For the buyer, this can help achieve business ownership if there is not enough cash to buy the business otherwise. It removes bankers from the transaction and allows the seller and buyer to work together to finalize the deal.

The seller will carry the promissory note, and the buyer makes payments to the seller. This can range anywhere from 30-60% of the purchase price.

The terms of the loan are typically something like 5-7 years. Usually, collateral will be required, such as a mortgage on commercial real estate, along with a personal guarantee.

Seller financing shows that the seller has confidence in the profitability and performance of the business.

Steps to Seller Financing

Since the seller is acting as the financier of the transaction, there are some steps involved that are similar to what a bank loan would require.

1. The buyer will submit an application, including relevant personal financial information.

2. The buyer will prepare a business plan, as well as provide background and experience.

3. The seller will pull a credit report on the buyer.

4. The buyer may need additional funding, such as a traditional loan or investment from friends or family if there is still a gap between seller financing and purchase price.

5. The transaction is closed, with a lawyer or business broker drawing up the agreement.

When the seller is providing financing, the seller will want to determine the buyer's creditworthiness to ensure that the loan will be repaid.

Benefits to Seller Financing

In some ways, seller financing may benefit you even more than a traditional bank loan. You have likely already developed a relationship with the seller throughout the acquisition, and the financing is one more way to continue to work together.

A seller may be more flexible than the stringent requirements of a bank. And, unlike a bank, you have the ability to negotiate the terms of the financing with the seller.

Bank financing will typically involve a lot of fees. For example, you may have documentation fees or origination fees. Seller financing will have fewer fees.

Most importantly, you have the vested interest of the seller. The seller will want to ensure that the business continues its success, so the loan is repaid. The seller may continue to advise or consult with you as you take over the business, which can help with the transition both in the short- and long term.

Finding a Business to Buy

As you begin a search for an existing business to buy, you could start with traditional approaches of looking in your community and talking to people in the industry. Or you can take your search online. 

You can be matched with acquisition opportunities in your area based on your criteria and connect with a seller. Once you find a good fit, you can discuss the financing, including if seller financing to buy a business is an option.

Find a business for sale now.

Most related post handpicked for you - read on…

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.

How to Buy a SaaS Company: A Guide

Need some help with making the right purchase?

Check out this guide on how to buy a SaaS company.

Here’s What We’re Covering:

1. Why buy a SaaS business?

2. Where to buy a SaaS company?

3. Financial due diligence.

4. Technical due diligence.

5. Marketing channels.

6. Research competitors

7. Company branding

8. How to buy a SaaS company?

The SaaS business model is gaining traction. In fact, by 2022 SaaS revenue is projected to reach $143.7 billion.

The SaaS model is low-cost, scalable, and robust. One of the major advantages of SaaS companies is that they're cloud-based. Because of this, they have been largely unaffected by the current pandemic.

Are you considering acquiring a SaaS business? Keep reading to find out everything you need to know about how to buy a SaaS company.

Why Buy a SaaS Business?

There are a number of reasons to consider buying a SaaS business. First of all, you're getting your hands on a business that's already making money. The SaaS model is subscription-based, which can be very lucrative in the long term.

SaaS is also a robust business model. Because the software runs in the cloud, you don't have to worry about managing supply chains or the logistics that come with operating physical hardware.

An established SaaS business has already done the hard work of breaking into the market and acquiring paying clients. If you were to build your own SaaS business, it would take a lot of time before the profits began rolling in.

When purchasing a SaaS company, there are different ways to make money. You could buy it cheap and try to flip it. Or, you could use your skills to grow the business, build new revenue channels, and sell it in 3-5 years.

Where to Buy a SaaS Company?

If you've decided to buy a SaaS business, the next decision you need to make is where to buy one?

If you choose to go through a broker, then you need to do some research on different marketplaces. There may be several good-looking business brokers out there, but it's your job to vet them.

Is the brokerage legit? Do they have a proven track record of making successful sales? These are the kinds of questions you need to be asking when vetting different marketplaces.

Check reviews to see whether their customers are satisfied with their services. By following these simple steps, you can narrow down your search to only the very best brokers.

The advantage of using a broker instead of buying privately is that the broker will check the legitimacy of the businesses before putting them on their marketplace. This can save you a lot of time. Just make sure their vetting process is up to scratch.

A good broker will ease your anxiety when working through a deal. That's why many people choose to work through a marketplace instead of buying privately.

However, using a broker doesn't mean you don't need to do your own due diligence. 

Financial Due Diligence

One of the most important steps before buying a SaaS business is checking their financial accounts.

Remember, screenshots of monthly revenue and traffic are not enough to discern whether the performance of the business matches its valuation. Once you've found a listing that interests you, request access to their analytics accounts. Now you can objectively assess the data to make sure it all lines up.

Checking revenue is not enough, though. You should also have a look at the company's profit and loss. A SaaS company with high expenses might make you think twice about following through with the purchase.

Technical Due Diligence

The foundation of any SaaS business is the source code. Once you've established an interest in a particular company, you'll want to check out the backend to see how it all runs.

Solid software architecture is very important for scaling a SaaS business. You don't want to buy something that hasn't been built to last. If you don't have the technical ability to assess the code yourself, hire someone who can help you.

Make sure you hire an expert who knows the coding language used by the company. An experienced developer will be able to run through the backend and figure out if there are any weak points in the software.

Marketing Channels

When you're vetting a SaaS business, you should check its marketing and acquisition channels. You need to know what their marketing strategy is and how they acquire new customers.

SaaS businesses usually get traffic from one or more of the following sources:

• Organic traffic (SEO)

• Social

• Referral

• Paid advertising (e.g. Google Ads)

You could consider hiring an SEO expert to check their links and find out where the majority of their traffic comes from. 

If they get all their traffic through paid advertising, then there might be an opportunity for you to improve their SEO and boost organic traffic. Diversifying traffic sources helps build a more robust business.

This can also help attract new customers and increase revenue. Identifying problems like this that you can easily solve, can make the acquisition even more lucrative.

Research Competitors

No matter what kind of business you get into, you'll always be sharing the market with competitors. SaaS companies are no different.

Before you decide to buy, you should have a thorough understanding of who your competitors are and how they operate. For example, are you buying a business at the top of their niche? Or is there still lots of room for growth?

Check competitors to see how their offering compares with yours. How much do they charge? What's included in their fee? How does their software stack up against yours?

Company Branding

You've checked out the source code and you're happy with the product. Now, what can be done to improve the look and feel of the brand?

How does the company present itself online? Check their website and social media pages. Even if their reach on social media is small, it's not a big deal. This represents another opportunity to scale the business.

Check to see if the company has any trademarks and whether they're included in the sale. Before buying a SaaS company you need to know what's included in the deal.

How to Buy a SaaS Company

Now you know how to buy a SaaS company. SaaS businesses are becoming more and more popular due to their robust, cloud-based infrastructure, low costs, and high revenue potential.

If you're looking to buy a SaaS company you need to do your due diligence. Check their accounts, including P&L, and hire a veteran developer to vet their software. Inspect their marketing channels and identify opportunities to improve on SEO and branding.

Are you ready to buy a SaaS company from an experienced and reputable broker? Find a business for sale now.

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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.

A Step-by-Step Guide on How to Get an SBA Loan

Looking to get an SBA loan?

Check out this step-by-step guide on how to get an SBA loan.

6 Steps on How to Get an SBA Loan:

1. Understand why you need the money.

2. Check your eligibility.

3. Choose the right SBA loan program.

4. Find a lender.

5. Prepare your paperwork.

6. Fill out the application form.

A whopping 29% of small businesses fail because of a lack of enough capital.

Are you planning to set up a business but don’t have enough funds? Do you want to add more cash to your existing business? Worry not; this guide will help you know how to get an SBA loan with ease.

SBA loans are government-backed. They have favorable interest rates, flexible repayment terms, and they are easy to get. Millions of entrepreneurs have benefited from the loan, and you can get it too if you are eligible, and you understand the basics. 

Here is the step by step guide to help you acquire it:

Step 1: Understand Why You Need the Money

The first important step to get an SBA loan is to know why you need the money. Before you apply, you should ask yourself if the loan is necessary or you can do without it.

Some legit reasons as to why you need the loan might include:

• To get new pieces of equipment

• To acquire new land for business expansion

• To refinance an old debt with a high interest rate

• To hire new employees

• To add new stock

You might also take a loan to buy a business or finance your startup. Don’t take a loan to finance your home projects. 

The lenders will need to know your loan's purpose and might investigate further to know if that’s how you will use the loan. So plan well, and determine the exact amount to borrow.

Step 2: Check Your Eligibility

Check if you qualify for the loan. Though the SBA loans are meant for entrepreneurs, not all businesses qualify. Here are the standard requirements for most SBA loans:

• Excellent credit score- some lenders check your personal or business credit score. You should ensure that it’s excellent to secure the loan

• A business plan- you should create a valid business plan to enhance transparency

• Business documents- they include your tax payments, balance sheets, profit and loss records, etc

• Size requirements- your firm should meet the SBA requirements of a small business

• Collateral- some lenders may require you to provide collateral if the loan is risky, or you are asking for a larger amount

Some lenders may require proof that you tried to apply for loans from other conventional banks and failed. Confirm that you have every important document to improve your chances of approval.

Step 3: Choose the Right SBA Loan Program

There are three main types of SBA loans. They include SBA 7(a) loans, 504 (a) loans, and the Microloan SBA loans.

SBA 7(A) Loans

They are the most popular. The common type of these loans is the community advantage loans, which are designed for low-income people. The average loan amount for the SBA 7(a) loans ranges from $250,000 to $5 million.

504 (A) Loans

They are great for entrepreneurs who wish to buy new business equipment, renovate buildings, or buy land pieces. The maximum repayment period is 10 years, and the maximum borrowing amount is $5 million.

Microloan SBA Loans

Microloans are smaller, with a maximum borrowing amount of $50,000. The interest rate is low too.

You can only choose the right type of loan when you understand the available options. What does the lender offer? Does the loan meet your needs? As you choose, you should consider the interest rates, the loan amount, and the repayment period too.

Step 4: Find a Lender

Many lenders offer SBA loans. A large number of lenders may easily overwhelm you if you are not keen. That’s why financial experts advise borrowers to take their time when looking for a lender, even when the financial need is quite pressing.

You can either search on your own or find a referral service. The referral services offer a list of the available lenders and compare the features to help borrowers choose the best. However, the referral firms might charge a small fee, which you should always be aware of before committing.

Here are the important considerations to observe when finding a great lender for your SBA loan:

• Check if the lender offers the exact SBA loan program you need

• Check the minimum amount that the lender offers

• Look at the eligibility requirements and ensure that you meet them

• Consider the interest rates- if possible, compare the rates offered by different lenders to get the most affordable

• Ask about the down payments- some lenders require the borrowers to pay down payments before applying for the loan

• Check the disbursement period

Lastly, consider customer service. The best lender should have a great customer care team to provide the best customer service. You might check the review and references too to know the firm's reputation and customer service.

Step 5: Prepare Your Paperwork

Assuming you now have a specific lender in mind, you should prepare the right paperwork required for the application. Your lender should give you a list of all the things you should have before you apply.

Here are some of the vital documents that you must provide to get an SBA loan quickly:

• Your business licenses and permits

• Your business plan- it should show how you will use the loan

• Your personal documents such as the national identification number and so on

• Your current balance sheet as well as the P&L accounts

• Your tax returns forms

• Proof of business ownership

Do not forge documents. Lenders conduct strict scrutiny to determine the truth in the documents you provide. 

Step 6: Fill Out the Application Form

Having provided the documents and met the other eligibility requirements, you can now fill out the application form. The form should indicate all the relevant information regarding SBA loans. For instance, it should state the interest, the amount, repayments, and other terms.

Read the information carefully to avoid making mistakes. If possible, find someone to help you translate the information for easier understanding. Here are a few rules to observe when applying:

• Avoid spelling or grammar mistakes

• Provide the correct information

• Don’t sign/ fill in any information if you don’t agree to the lending terms and conditions

• Submit the applications at the right time

You can either submit your application online or offline according to your lender's preferences.

Seek Professional Guidance on How to Get an SBA Loan

The SBA loan application may be overwhelming to an entrepreneur who has never applied for another loan before. If this is your case, then you should seek professional help.

A great lender or business broker will help you know how to get an SBA loan quickly and guide you through the business acquisition journey.

BizNexus is your resource for connecting with opportunities and the professionals who can help you get your acquisition financed. The platform helps entrepreneurs acquire new businesses, buy a new franchise, and connect with the right professionals to help sell their businesses. 

Intermediaries on our platform routinely advise entrepreneurs on their available options to help them make the best decisions. If you plan to buy or sell a business, get started by logging into your free BizNexus account to get matched with the right professionals to help.

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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.

From the Trenches - Interview With Florida Business Broker Charlie Meeks

Charlie Meeks

Current market perspective from the trenches of the business acquisition & sale industry

Learn More

Sit-Down Interview With Business Broker Charlie Meeks

What are your thoughts on where business acquisition & sale market activity is heading over the next 3-6 months?

I believe that there will be significant opportunities to assist our clients through the sale of their business and with the influx of new Florida residents there will be great opportunities to assist buyers as well.

What do you see as the most significant SELF-IMPOSED threats out there that could hurt the market for business acquisition & sale and small business activity in general?

If the trend continues whereby everyone continues to hunker down under the threat of COVID-19 we are in for a very long recovery. 

That recovery may not even be realized is our political client doesn't correct itself as well.  Business owners will not contemplate a structured exit for their business, but rather sell out of fear that they could lose everything. 

So there are two issues to consider as we move forward that could threaten the survival of our total social system.

What do you see as the top three things the government needs to do to support the main street business acquisition and sale opportunities for small business owners through the remainder of this year?

1. Lift the restrictions on how businesses operate.

2. Allow businesses to function as they have in the past.

3. Keep our tax structure in place as it is.

4. Eliminate ObamaCare

5. Let businesses run themselves instead of allowing government to override what has worked for many years.

What do you see as the top three reasons to BUY a business in 2020?

The inventory is available and unfortunately, the prices are lower than they have been for many years. This is difficult as there are so many uncertainties at this time in our economic environment.

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7 critical points every business owner must know berfore selling their business

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What are some of the questions a business owner should ask when choosing an advisor to help buy a business or work on exit planning to help navigate through this challenging stretch?

When choosing a business broker to help you sell your business, be sure to ask the following questions:

1. What is your experience in selling a business like mine?

2. How will your market my business for sale?

3. How will you price my business so that it will sell quickly?

4. What do you know about my industry and where to find the likely buyers?

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buying a business - where do you start

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How would you rate the current political environment related to small business growth, business acquisition & sale?

2/5

What are your thoughts on transaction terms for buyers & sellers in the current market?

There needs to be flexibility on the parts of both buyers and sellers to get the deals done. There needs to be some seller financing.

Sellers need to provide a comfort level to the buyer regarding retention of the customer/client base.

Thoughts on business valuations in today's market?

Business valuations are very important in the determination of what a business may sell for.

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Watch the whole interview with Florida Business Broker

Charlie Meeks.

What's a "SPAC" and why are these things so hot right now?

How SPACs Work

Otherwise known as “blank check companies,” these things have become HOT models in 2020 and since the onset of the pandemic.

Source: Yahoo Finance

How it works:

1. You give me a pile of money

2. I can go out into the market and spend it on whatever company I like

What’s the catch?

Check the overview video to learn more:

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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.

Big Tech Acquisitions - How to Grow Through a Pandemic

CORONA Activated Big Tech To Go On A Buying Spree

Unless you’ve killed your TV, cut the cable, or have taken a break entirely from social media and all things internet over the past few months (completely understandable and no criticism from our end if that’s the case), it’s not new news to tell you big tech has been on a rampage of acquisitions since the outbreak of the pandemic.

Startups that never prioritized profitability (or simply didn’t have the chance to get there before the pandemic hit) are flailing, layoffs and pay cuts became the norm in Spring 2020, and the larger companies with access to capital found themselves in a once-in-a-lifetime position to take advantage of a downturn like this a very real growth and expansion opportunity.

We’ve had a ton of early-to-mid-stage startups go up on the BizNexus platform this year as newly available acquisition opportunities, but if you’re interested in a complete list of all of Big Tech’s acquisitions since the Covid-19 outbreak, check out CB Insights 64 page report on the industries & technologies that will shape the post-virus world:

If you’re interested in acquiring some tech opportunities of your own, be sure you’ve set up “saved searches” for that on the BizNexus platform and we’ll match you with those opportunities as they become available as auction or pre-CIM opportunities.

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BizNexus -Learn More From Our YouTube Playlist:

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THE BIZNEXUS ROUNDUP

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CVBBA Webinar: Deal Origination in a Post-COVID World

Deal Origination In A Post-COVID World

In this webinar hosted by CVBBA President Neal Isaacs, Adam Ray (Founder and CEO of BizNexus) shares his thoughts on the state of deal origination in a post-COVID world. He covers some key shifts in the deal origination space, including the reactions of central industry players like private equity & strategic acquirers as well as individual buyers and sellers, and changes in the way technology is used to get deals done. He also elaborates on the changing nature of the deal process itself and what business brokers should do to position themselves for success.

See the full interview here:

More content from the BizNexus Business Broker community below…

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.

From the Trenches - Interview With Alberta Business Broker Steve Fylypchuk

Steve Fylypchuk

Current market perspective from the trenches of the business acquisition & sale industry

Learn More

Sit-Down Interview With Business Broker Steve Fylypchuk

What are your thoughts on where business acquisition & sale market activity is heading over the next 3-6 months?

My brokerage is focused on the Main Street market. For a few months in early 2020, we saw a slow down of new businesses coming on the market in Calgary and Alberta. That period has past and activity has picked up. That pause in new businesses will cause a drop in closed deals over the next 3 - 12 months but it will be spread out.

What do you see as the most significant SELF-IMPOSED threats out there that could hurt the market for business acquisition & sale and small business activity in general?

The most significant self-imposed threat to our industry in the near future may be business owners that think a sale is impossible due to a dearth of buyers. There is no shortage of buyers for good businesses. Business owners should always talk to a professional and get an unbiased opinion on the saleability of their business.

What do you see as the top three things the government needs to do to support the main street business acquisition and sale opportunities for small business owners through the remainder of this year?

Governments need to make it easier to borrow money for the acquisition of a business and lower the tax burden on sellers. The more a business owner can keep after a sale, the more likely he/she will want to sell and for a reasonable price that makes sense for a buyer and a lender.

What are some of the questions a business owner should ask when choosing an advisor to help buy a business or work on exit planning to help navigate through this challenging stretch?

When choosing a business broker to help you sell your business Calgary, be sure to ask the following questions:

1. What kind of qualifications do you have?

2. Are you a member of the IBBA?

3. How many businesses did you sell last year?

4. Do you know what the market will pay for my business?

5. How will you keep the sale confidential while attracting buyers?

How would you rate the current political environment related to small business growth, business acquisitions & sales?

3/5

From the Trenches - Interview With Virginia Business Broker Hal Feder

Hal Feder

Current market perspective from the trenches of the business acquisition & sale industry

Learn More

Sit-Down Interview With Business Broker Hal Feder

What are your thoughts on where business acquisition & sale market activity is heading over the next 3-6 months?

I am seeing brisk activity and engagement from both buyers and sellers but the interest levels are very business category-dependent. By this I mean there seem to be 4 main groups of businesses:

1. Thrivers:  businesses that are essential and doing better than ever within the COVID landscape.

2. Survivors:  businesses that are experiencing an adverse short-term impact, but will come back to pre-COVID performance over time.

3. What I Worry:  businesses that have not been very impacted by COVID either up or down.

4. Demise:  these are businesses that will not be able to survive the impact of COVID and the related economic disruption surrounding the virus.

I expect the next six months into 2021 to continue along with the "cautiously optimistic" mindset. The buy-sell market seems to have digested the news and adverse impact of the virus, and despite, the rise of infections and deaths in certain geographies, I think business owners and prospects believe in the strength and resiliency of the underlying favorable economic fundamentals of the marketplace.  

The promise of an effective vaccine and improving therapy outlook is also a positive which provides an air of hope that come 2021 we can return to a pre-COVID pace.   

What do you see as the most significant SELF-IMPOSED threats out there that could hurt the market for business acquisition & sale and small business activity in general?

Attitude determines altitude ... business owners need to adapt, be flexible, and learn important lessons from the current market challenges.  

Why waste a good crisis? Seriously, 2020 is shaping up to be a great litmus test of adaptability and survivability for all of us. What can we learn from these challenges now that will better position us in the future?  I will give you an example .... after spending 35 years in the global auto business, I specialize in valuing, marketing, and selling franchise automotive dealerships.  

Before COVID, many auto dealers were reluctant to get into digital selling in a meaningful way. The virus came and changed all that.  

Auto dealers were "forced" to find new ways to sell products in a touch-less manner. The virus challenge enabled a sea-change of new methods, processes, and initiatives that will improve the way customers choose to buy vehicles. Event + Reaction = Outcome.  The reaction to a difficult event has now led to a positive outcome for both dealers and their customers.  

The greatest self-imposed threat is everything that lies between our two ears!

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POSITIONING FOR A SUCCESSFUL EXIT

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What do you see as the top three things the government needs to do to support the main street business acquisition and sale opportunities for small business owners through the remainder of this year?

1. Develop a fast and simple way for business owners to get their PPP loans forgiven.  It worries us when I see a one-page form to obtain the loan and a ten-page form to get forgiveness for the loan.

2. Provide banks with guidelines to facilitate the sale/transfer of business when a PPP loan is still active and not yet forgiven. Businesses are bought and sold every day including during a global pandemic ... help us help the business owners! 

3. Continue to monitor the market impacts of COVID and act swiftly with new programs if and when they are required.  Small business is the lifeblood of the USA economy and can lead us back to full recovery if we continue to support them. 

What do you see as the top three reasons to BUY a business in 2020?

1. There are vast numbers of great businesses for sale right now. The boomers are retiring in big numbers and demographics are driving excellent business inventories and opportunities.

2. Interest rates are near historical lows which greatly improves business affordability.  This fact coupled with banks having available capital and an aggressive leading posture set up nicely for buyers.

3.  In the auto sector, the shift to electrification, autonomous vehicles, and ride-sharing platforms is driving a lot of industry disruption.  Where there is disruption, there is an opportunity.  Right now it seems as if half the dealers are looking for the exit door, and the other half wants to consolidate operations and get bigger. Depending upon your goals, this is a great time to be a buyer and a seller if you are working in the franchise automotive industry!   

What are some of the questions a business owner should ask when choosing an advisor to help buy a business or work on exit planning to help navigate through this challenging stretch?

The effective business broker has to wear a lot of hats ... they have to be a trusted advocate and place the client's interests upon all else, they have to be a financial wizard and understand the financials to develop a market-based pricing offer.  

They have to be marketing experts and develop a campaign that gets the business in front of the right prospects. They need to be an effective merchandiser and develop a package of materials that conveys value in a compelling, relevant, and differentiated manner.  They have to be the "deal quarterback" and call the plays they move the deal towards closing, including bringing in functional experts when needed.  Above everything, they have to protect the confidentiality of the client, safeguard their interests, and help them derive the most return from their hard-earned investment in a swift, stress-free, and high integrity manner.  

The question to the broker should be:  How many hats can you wear?

How would you rate the current political environment related to small business growth, business acquisition & sale?

4/5

What are your thoughts on transaction terms for buyers & sellers in the current market?

Every deal, every buyer, and every seller is different. There is no such thing as an average deal. What I try to do is to pre-qualify all my listings such that there is a term sheet included in the prospectus package which spells out for the buyer an attractive, viable way to purchase the business via a bank loan.  

I have found this practice makes a good listing, a great listing, and makes a great listing, a terrific listing!

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Learn More On Deriving The Highest Return From The Sale of Your Dealership

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Thoughts on business valuations in today's market?

Business valuations are a fundamental process step in the pricing of the business. Depending on the business category, the COVID situation can impact the valuation -- both positively or negatively.  

I am finding that solid, established, and profitable businesses that possess strong brand equity, and motivated, talented teams are holding their multiples and business values in this environment.