Are you ready to make your mark as a business owner? Purchasing an existing, profitable business is a strategic and rewarding way to embark on your entrepreneurial journey. Almost always, buying an existing business is more efficient, less risky, and less costly than starting a new business “from scratch.”
With over three decades of experience, BizBen is instrumental in helping aspiring business owners achieve their dreams. This comprehensive guide will provide essential steps for successfully buying a profitable business. Additionally, we will demonstrate how BizBen.com can serve as your ultimate resource throughout this exciting process.
Before you commence your search, it's essential to lay the groundwork by clearly defining your objectives and criteria:
Business Type: Determine the type of business that aligns with your skills, passions, and interests.
Financial Capacity: Assess your financial capacity, including the budget and working capital you can allocate to the purchase and the post-closing business operations.
Location: Decide on the geographical location that suits your preferences.
Role: Consider whether you want to play a hands-on or passive role in the business. (Is it to be “owner-operated,” semi-absentee, or absentee management?)
Having well-defined goals will streamline your search and ensure that you make a choice that resonates with your vision.
Understanding market dynamics and industry trends is crucial for making informed decisions.
Succeed in Booming Sectors: Delve into industries that are experiencing robust growth or undergoing transformations to align with emerging trends.
Assess the Market: What is the likelihood of sustained market demand in the years ahead? Is it growing, declining, or remaining steady? What other services, products, or technologies could supplant what is offered by existing businesses?
Match Your Interests: Look for trends and opportunities that align with your interests.
Know Your Competition: Analyze the competitive landscape and evaluate the demand for businesses in your chosen niche.
Effective market research equips you with the knowledge needed to identify lucrative business opportunities.
A solid financial foundation is essential when buying a business. Secure your financing before commencing your search:
Financial Resources: Determine your budget, encompassing the purchase price and working capital required for maintaining cash flow during the transition and for subsequent business growth.
Financing Options: Explore various financing options, including personal savings, SBA loans, home equity loans, investors, and/or seller financing.
Having your financial resources pre-approved and in place demonstrates your seriousness to sellers, and positions you as a strong buyer.
🚀 Ready to embark on your journey to find a profitable business? Register on BizBen.com to access an extensive treasure trove of listings across industries and locations that match your preferences!
Leveraging the expertise of professionals can significantly enhance your buying experience:
Network and Expert Advice: Tap into your professional network and seek advice from industry experts.
Professional Assistance: Collaborate with experienced professionals such as business brokers, due diligence experts, business lenders, attorneys, and accountants. Their insights and guidance are invaluable in navigating complex legal, tax, and financial matters and ensuring a smooth transaction.
Explore Diverse Sources: Utilize a variety of sources, including BizBen.com, which offers an extensive range of listings.
Think Outside the Box: Consider businesses in fields similar to or synergistic with your target industry. Search broadly… take off the blinders.
With the financial, technical, market, and human resource information and other data disclosed to you in the seller’s “confidential information memorandum” (CIM), determine what the business is worth to you. Advice from an accountant and other financial professionals can be helpful; but, fundamentally, you need to determine that the business can service the financing (whether your own funds or a loan), provide you compensation for your time, return a profit on top of that time-based compensation, and provide a sound platform for future sustainability and, if important to you, growth. Ultimately, though, the final decision must be based not on what the business is worth to an accountant, a banker, a broker, or an appraiser; rather it must be based on what the business is worth to you.
Determine what similar businesses have actually sold for (not what sellers are asking for similar businesses), with the most emphasis on the multiple of seller’s discretionary earnings (SDE) or cash flow and on the percentage of gross revenue.
Effective negotiation is an art that involves understanding the seller's motivations while being clear about your terms:
Price and Terms: Negotiate with the seller to reach a fair price and deal structure that aligns with your goals.
Contingencies: Be prepared to include contingencies like a successful due diligence inspection, landlord agreement to lease transfer, bank financing being obtained,and/or satisfactory financial review in your offer.
Searching for the perfect business opportunity? Join BizBen.com's vibrant community of buyers and sellers; it's where successful deals come to life!
Work closely with your attorney and accountant to finalize all legal and financial aspects of the purchase:
Draft Contracts: Collaborate with legal experts to draft contracts that protect your interests.
Secure Financing: Work on securing financing.
Licenses and Permits: Ensure all necessary licenses and permits are obtained and comply with regulations.
Before finalizing the deal, a detailed inspection of the business is essential to ensure transparency and avoid hidden surprises.
Once you've identified a potential business and entered into a continent “asset purchase agreement” (APA), performing comprehensive due diligence is paramount:
Request Detailed Records: Request comprehensive financial records, and meticulously analyze the business's financial performance. Include tax returns, accounting software, bank accounts, and personnel records.
Assess Strengths and Weaknesses: Evaluate the strengths and weaknesses of the business, including asset conditions, lease agreements, employee expertise and loyalty, and customer and supplier contracts.
Professional Assistance: Engage professionals like accountants and attorneys to assist with due diligence.
Seek Assistance from the Seller’s Business Broker: In particular request an extensive and comprehensive “Seller Disclosure Statement” covering every conceivable legal, regulatory, and liability item, including workplace safety, insurance claims, fines and violations, human resource disputes, governmental investigations, lawsuits (active, contingent, pending, and possible). Have this info fully reviewed by your own lawyer.
Plan for a seamless transition:
Understanding Operations: Familiarize yourself with the business's operations.
Crawl Before You Walk: While there are exceptions, in most cases don’t change anything for at least six months; learn the business before you reinvent it.
Employee Engagement: Meet with key employees and create a strategy for the initial months of ownership. Do whatever is reasonably necessary to retain these valuable business assets.
Maintaining continuity can be vital to the business's success.
Business ownership is a continuous learning experience.
Adaptability: Stay adaptable and open to new ideas.
Focus on Growth: Once the business is acquired, focus on growth and improvement.
Buying a profitable business can be rewarding, but it demands meticulous planning and diligence. By clearly defining your goals, conducting comprehensive research, seeking professional guidance, and following a systematic approach, you can increase your chances of acquiring a successful sustainable business. Remember that every business acquisition is unique, so adapt your approach accordingly. With the right strategy and mindset, you can turn your entrepreneurial dreams into reality.
🌟 Ready to embark on this exciting journey? Register on BizBen.com today and explore the latest business listings. Your dream business is just a click away!
Here's to your success in buying a profitable business! Should you have any questions or need further guidance, don't hesitate to reach out. Happy hunting!
Sign Up for a FREE BizBen Account today! Our free account allows you to save postings/blog posts/discussions/resources, create custom email/text alerts on new postings entered, take private notes on postings, save your emails sent all in one area for later review, plus more!
Contributor:
If your business involves alcoholic beverage sales, we can help. Obtaining a liquor license transfer or selling a business with a license in California does not have to be a frustrating and overwhelming process. We have procured thousands of licenses for our clients.
ServingAll Of California
I am the Founder Of BizBen.com. I consult daily with intermediaries, business buyers, owner/sellers & advisors daily about buying and selling California small to mid-sized businesses. Contact me today about joining & utilizing BizBen, consultations, & advisory services.
ServingNationwide - All Areas
I am an experienced entrepreneur, attorney, & business professor. I & my EvergreenGold® team offer business owners sound advice & expertise to build business value & achieve profitable sales. Call me today for a business evaluation & SWOT analysis for your business anywhere in the USA.
ServingNationwide
For over 25 years Peter Siegel, MBA has been providing niche business purchase financial advisory and loan placement services with SBA Loans, Non SBA Financing, Retirement Plan Conversions, Note Restructures, etc. Call me regarding business purchase financing and to get pre-qualified: 925-785-3118.
ServingNationwide - All Areas
Laundry consulting, due diligence, buyer representation: We preview laundries for you and evaluate them. 28 years laundry industry experience: buying, selling, valuing, retooling, analyzing, consulting services for laundry buyers and entrepreneurs in California. Contact us today about our services.
ServingSouthern California
McGovern Escrow Services, Inc., is a leading independent escrow company. We are a trusted partner with our clients, assisting them through the tangled bulk sale & liquor license transfer process. We provide attentive, quality & innovative customer service. Phone Elizabeth McGovern at 415-735-3645.
ServingSan Francisco Bay Area, North Bay, Central Valley
Cheryl's a restaurant business broker, over 25 years in the bar and restaurant industry coupled with a J.D. Cheryl works tirelessly to create successful strategies and effective negotiations for those who wish to purchase a new or sell an existing bar, restaurant, cafe, or night club. 415-309-2722
ServingCity Of San Francisco
The Veld Group provides a refreshing approach to Business Brokerage, Mergers & Acquisitions and Business Consulting and Valuations. From Your Street to Wall Street, we cater to Main Street Businesses as well as more complex Strategic Firms and Start-Ups.
ServingSouthern California
Financing a business purchase, or getting cash for a down payment can take many forms. Hopefully the options listed below will give you some ideas where you can find the money to buy a California business!
A potential small business owner/seller asks the question: I have a preschool and am thinking about selling it but my lease is ending soon. What would be the best thing to do? Do I renew the contract or do I act the landlord to sign a contract to the new buyer? and is it a good time to sell?
The likelihood of selling a business is often determined by external factors in the marketplace. Here are eight influences on how easy, or difficult it might be when selling a small business. Peter Siegel discusses these factors in a BizBen.com article.
One of the strategies for selling your business to a very cautious buyer is to relate the price to performance of the company in the months after the buyer takes over. Peter Siegel with BizBen.com explains this strategy.
Don't buy a laundry business before reading these 5 tips to maximize your investment. You'll soon be able to buy a laundry with confidence! Peter Siegel, MBA with BizBen.com discusses this topic.
The three most widely used sources of funds for financing business purchase assets are buyer's cash, seller financing, and SBA bank loans. Peter Siegel, MBA with BizBen.com and an SBA loan consultant & placement specialist explains the differences between them.
Before you buy a dry cleaners small business, read these critical tips about this industry. Discover why a dry cleaner needs to be "green" to be profitable. Peter Siegel, MBA (BizBen ProBuy, ProSell Program Advisor) explores this topic and other helpful strategies on buying a dry cleaning store.
Laundromats undeniably represent a fantastic business opportunity. They offer high returns and require minimal hours, making them an attractive investment. Even during severe economic downturns, laundromats prove resilient as they provide an essential life service, but why do laundromats fail?
For Laundromat investors looking to enter the industry, these are challenging times. This significant industry that is surging due to "smarter" equipment, cleaner spaces, more staff, & the larger payback for offering a better customer experience. But, brokers & sellers have unrealistic valuations.
The coin-operated laundry business has undergone significant changes, evolving beyond its traditional model. Laundromats are now transforming into comprehensive "laundry businesses." This shift reflects a broader approach that goes beyond mere self-service coin-operated machines.
Chuck Post hosts these live FREE online webinars on Buying A Card or Coin Laundry. These webinars occur every Weds at Noon. Have your questions ready for an open and honest discussion about both the Pro & Cons of the Vended Laundry Business. RSVP or for more info phone Chuck at 619-227-5711 direct.
The laundry business offers all of those rewards of business ownership, with much fewer headaches than with most other businesses. However buyer beware - Chuck Post, laundry broker and consultant covers several mistakes many first time laundry buyers commit when buying a California laundromat.
Many Californians want to buy a coin laundry because it's a business that doesn't require full time owner attention and because, as an all cash business, the owner is always paid before the service is provided. But there are a few misconceptions about the business and a buyer should have the facts.
When investing in a laundry business, there are two methods. One is preferred, but the other is far more common. If you are considering entering into a new industry, like most now entering the laundry industry, you want to have a good understanding of both opportunities. Chuck Post explores both.
Chuck Post, a leading laundry expert with over 37 years of developing laundries, retooling, and rebranding hundreds of existing laundries, tells investors how to search, find, evaluate, and do good laundry due diligence laundries for acquisition. A must read for new investors & current operators.
Laundromats and coin operated Laundromats are popular choices among business buyers as they often can be successfully run as an absentee run business. You need to be strategic about when you sell your Laundromat so you don't get taken to the cleaners by a buyer and so that you maximize your profits.
Laundry buyers and investors should expect both challenging times and opportunities for success in 2022 and 2023. Chuck Post, Laundry Industry Advisor explores growth opportunities, equipment advances, industry challenges and trends all laundromat buyers and investors should know about.
Coin operated laundry for sale (also referred to as a laundromat), which typically can yield a 20% to 30% profit (before taxes, interest, depreciation and amortization) on gross revenues to the owner. Peter Siegel, MBA with BizBen.com discusses this topic on buying small to mid-sized laundromats.
Utility rates are on the rise. I am getting calls from laundry owners complaining of the costs, asking for ideas. So what is the answer? What is the best approach in combating these costs? Chuck Post, laundry consultant discusses strategies for keeping coin laundry utility costs under control.
Are you thinking of selling your California vending route? More business buyers than ever before are looking to buy such a business. Peter Siegel, MBA with BizBen.com discusses tips for selling your vending route.
Buying a professional service business, like a dental practice, is one of the most profitable ventures you can enter into if you are considering becoming a small business owner. In this blog, Peter Siegel, MBA discusses six things you need to know about buying a successful dental practice or office.
Entrepreneurs who think they want to buy a towing business need to have some idea of what to look for when examining businesses for sale in this industry. The assets, including tow trucks and perhaps the property where towed vehicles are stored, determine much of the value of this kind of company.
Buying a day care for sale is a dream for many people. Here, you'll learn how to successfully negotiate the purchase of a day care for sale to make that dream a reality. Peter Siegel with BizBen.com covers this topic.
There are several things to consider when placing a value on a preschool. Businesses that are regarded as leading preschools in their area can go for premium prices so know what you have so a potential buyer can't take advantage of your lack of knowledge. Peter Siegel with BizBen.com explains.
If you are open to exploring the franchise opportunities available the commercial cleaning industry is an area you should consider. Commercial cleaning franchises are quickly becoming a popular choice among business buyers and here are my 6 reasons why you should consider buying one.
Buyers interested in buying a janitorial cleaning business will find companies in this industry for sale that are quite profitable. Careful due diligence, including the six factors covered in this blog post, is advised before completing a deal. Peter Siegel, MBA with BizBen explores this industry.
One of the most important steps in buying a business is doing your due diligence. When buying a California winery, there are three major areas to focus your attention during this period of research. Learn about these three factors in this BizBen blog post on wine industry due diligence for buyers.
A business buyer in the BizBen ProBuy Program asks how to handle the inventory amount in the purchase price of a business. Other questions answered in this article: Do you add the inventory value to the business value? Should the owner be expected to take back a note for the value of the inventory?
How does the laundromat business look as we enter this changing environment? Is it still as easy to operate a laundry and be profitable? Is it still the American Dream Business that it has been known to be? Yes, but… Chuck Post, Laundry Advisor & Consultant initiates this BizBen Discussion post.
We are finding that many laundry buyers and investors are not being given true light to selected elements of value or there are inconsistencies in the interpretation of these elements of value. This common error needs to be addressed. In this BizBen Discussion we address many of those factors.
Chuck Post a laundry consultant, specialty broker, buyer representative & due diligence advisor starts this discussion on why it's important to have an exit strategy in mind while buying a laundromat! He & others explain why this concept is so important for buyers especially in the laundry business.
However all the laundry listings are asking 4X to 5X multiple for an asking price! Is this reasonable, standard? We are are looking buy either a coin or a card laundry and want to pay a "fair" price. What factors go into valuing a laundry business these days? Multiple Advisors answer this question.
When buying an Elderly Care Home what should potential buyers always ask the broker or owner before proceeding? Find out in this Discussion on BizBen. Items buyers of elderly care homes will want to know more about why the seller is moving on, average length of stay, placement fees paid, etc.
A business buyer asks about the viability and purchase of a home health care service and about the future of this industry - Peter Siegel, MBA takes on this question with other ProIntermediaries & Advisors on BizBen regarding the home health care industry and it's future for potential buyers.
I would like to start this discussion and see what other BizBen Users feel about (and possible contribute to this list via a comment and replies below) what items/questions/information buyers should be thinking about during the due diligence and buying process of manufacturing related businesses.
Is a dog grooming business for you? Business broker Joe Ranieri ponders this question with BizBen viewers and answers this question along with other intermediaries and advisors. Some replies cover: brick and mortar vs. mobile, licenses & certifications, maintaining and growing a clientel, etc.
The only time to get an exact and accurate inventory count, and valuation, is at the time the business is being transferred. To do so beforehand, would mean that any merchandise sold after inventory is taken, but before close of escrow - Peter Siegel, MBA with BizBen & others discuss this topic.
Buying a liquor store can present some major challenges to business buyers - a recent client on the BizBen ProBuy Program relates to Peter Siegel, MBA what the major challenges may be when searching for and buying a Californa liquor store business. I welcome other Advisors to weigh in on this topic.
Buying a gas station can be a profitable business. From my experience, here are the pros & cons of buying a gas station that I share with BizBen ProBuy Buyers when they come to me to to get pre-qualified for financing to buy a gas station (with or without real estate). I discuss all these factors.
How much money should you expect to make when buying an automatic car wash? Peter Siegel, MBA (BizBen ProBuy Program Director and Business Purchase Financing Expert) explains with other brokers, intermediaries, and advisors info on this topic.
This is a hard question to answer specifically without any knowledge of the business. What kind of car wash it is (auto, self-serve, or full service)?, How many bays does the car wash have? Is there any other streams of revenue? We discuss this topic regarding car washes on this BizBen Discussion.
Before purchasing a car wash (quick serve or full serve) you must understand that the industry as a whole will provide you with plenty of competition. More importantly, depending on what your interests are, you will identify what type of car wash you want. We discuss this all in this Discussion.
Doing due diligence when buying any type of business is extremely important. Regardless of what type of business you are buying there are certain things you will always look at such as, financials, equipment, legal issues etc. We take a look at several angles for optimal gas station due diligence.
In this Discussion, we define financing options available to potential restaurant buyers when purchasing a small to mid-sized restaurant business (with or without real estate). When it comes to financing a restaurant purchase, potential restaurant buyers have several options to choose from.
Buying a small to mid-sized restaurant can have many pitfalls, and potential restaurant buyers should know how to avoid getting burned! Several restaurant advisors weigh in with (Peter Siegel, MBA at BizBen) and discuss tips for buying a restaurant in California.
Was chatting with a potential buyer of a restaurant in our BizBen ProBuy Program and he asked me what he should look for in due diligence when he finally did find a restaurant he was interested in. Peter Siegel, MBA with BizBen and others on BizBen explore this topic.
Ice cream shops are a favorite with buyers of small businesses, but many times don't know what to look for when seeking a purchase of a shop. Joe Ranieri and other intermediaries and advisors share their experience and expertise to potential ice cream shop owners. Explore these tips to learn more.
For those who don't know, a non-compete agreement is a contract between a buyer and seller of a business, which after the sale, prohibits the seller from engaging in direct competition with the business they previously sold. Joe Ranieri (Business Broker) adds this topic to a BizBen Discussion Post.
In our BizBen.com June 2021 Monthly Report the top ProIntermediaries and ProAdvisors on BizBen offer their thoughts about the current status of the business for sale marketplace with trends and predictions for Business Buyers, Owner/Sellers, Business Brokers, Agents, Advisors in the near future.
Sometimes business brokers just can't win with their clients, because if an offer comes in too fast & too early then they must have lowballed the price & the seller is suspicious, and if not enough offers come in after putting the business on the market - they may look unproductive to their clients.
As the year winds down, it's tempting for business brokers to go through their old files and throw them out to make room for new client's folders, but that would be foolish. Joe Ranieri (Orange County Business broker) discusses strategies for saving files - a key annual strategy for brokers/agents.
