How to Buy a Business Without a Broker
Determine the type of business you want to buy., Conduct research on the industry you want to pursue., Assess your financial situation., Assemble a personal financial statement., Research small businesses for sale., Choose a business to carefully...
Step-by-Step Guide
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Step 1: Determine the type of business you want to buy.
Conduct an assessment of your personal goals, interests and time availability.
New business owners have a better chance of success if they buy a business in an industry they understand. -
Step 2: Conduct research on the industry you want to pursue.
Preliminary research is your responsibility, with or without a business broker.
Begin by ensuring that the market in your geographic area isn't saturated with similar operations.
Consider embarking in an industry with sales that aren't limited to one region; this ensures opportunities for additional revenue streams. , Know how much money you can realistically put toward buying a small business, then research how much money it costs to buy one in your chosen industry.
Whether or not you utilize the help of a business broker, you must investigate the industry yourself. , This document displays your liabilities and assets.
Business owners always ask for this to qualify potential buyers.
Buyers can get help assembling this document from small business consultants and sometimes business brokers. , Since most business sales transactions are through word-of-mouth, ask industry leaders if they know of any businesses for sale.
Start with your local chamber of commerce and related trade association.
Also peruse trade publications and small business sales websites such as BizBuySell.com.
Some business brokers also search newspaper classified advertisements to locate businesses for sale.
Search online editions of newspapers to locate businesses. , Approach a small business owner and express your interest in buying their operation by offering to sign a non-disclosure agreement (a promise not to share confidential information about the business).
Business brokers usually negotiate the first approach.
You will need to take care of this first meeting yourself when a broker isn't involved.
By foregoing a broker's services, the business seller is saving money on commission fees and may be wiling to offer a lower price. , A letter of intent indicating your commitment may also be required by the buyer.
While business brokers can provide letter of intent templates, you can locate them online or in business buying books. , Ensure that the owner has acquired a wide variety of clients responsible for revenue, then look for consistent growth and steady sales with short accounts receivable time frames.
Many brokers analyze this information before listing a business for sale, but without a broker's assistance you must do it yourself.
Find assistance from small business consultants at your chamber of commerce office. , A certified public accountant is the best person to determine the accuracy of the business' financial statements.
A business broker will usually contract accounting services when conducting a transaction, but you can locate a qualified CPA through your chamber of commerce. , Always verify that existing agreements for real estate, equipment and inventory are transferable to a new owner.
While some business brokers can review this information for potential buyers, an attorney is the best person to help with this process. , Ensure the business doesn't have employee lawsuits or consistent claims against the operation by current and past employees or government entities.
Some business brokers may include this research in their fee but you can find this information yourself by contacting your state employment office. , If you choose to move forward with a purchase offer, have a business sale contract ready.
A business broker's main purpose is to prepare contracts during a sale.
However, you can handle this step by hiring a lawyer who specializes in creating business contracts.
Your sales contract will describe what you are willing to pay for the business. , Without a business broker, you will be responsible for negotiating a final offer.
Be ready with a backup contract that ensures you get a good deal while making the owner happy with the purchase.
New contracts can be obtained through your attorney. , Once all parties agree on a price, take the sales contract to a notary.
Next, transfer all other legal agreements into your name.
Conclude the sales process by following the transition schedule you and the business owner have agreed upon. -
Step 3: Assess your financial situation.
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Step 4: Assemble a personal financial statement.
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Step 5: Research small businesses for sale.
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Step 6: Choose a business to carefully examine.
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Step 7: Present your personal financial statement as a sign of your commitment to examine their business in closer detail.
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Step 8: Review the business history
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Step 9: financial statements and operating history.
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Step 10: Employ the aid of a certified public accountant.
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Step 11: Examine vendor contracts and leases.
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Step 12: Look at employment records.
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Step 13: Decide whether or not to acquire the business.
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Step 14: Expect the business owner to counter-offer.
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Step 15: Notarize the business sales contract.
Detailed Guide
Conduct an assessment of your personal goals, interests and time availability.
New business owners have a better chance of success if they buy a business in an industry they understand.
Preliminary research is your responsibility, with or without a business broker.
Begin by ensuring that the market in your geographic area isn't saturated with similar operations.
Consider embarking in an industry with sales that aren't limited to one region; this ensures opportunities for additional revenue streams. , Know how much money you can realistically put toward buying a small business, then research how much money it costs to buy one in your chosen industry.
Whether or not you utilize the help of a business broker, you must investigate the industry yourself. , This document displays your liabilities and assets.
Business owners always ask for this to qualify potential buyers.
Buyers can get help assembling this document from small business consultants and sometimes business brokers. , Since most business sales transactions are through word-of-mouth, ask industry leaders if they know of any businesses for sale.
Start with your local chamber of commerce and related trade association.
Also peruse trade publications and small business sales websites such as BizBuySell.com.
Some business brokers also search newspaper classified advertisements to locate businesses for sale.
Search online editions of newspapers to locate businesses. , Approach a small business owner and express your interest in buying their operation by offering to sign a non-disclosure agreement (a promise not to share confidential information about the business).
Business brokers usually negotiate the first approach.
You will need to take care of this first meeting yourself when a broker isn't involved.
By foregoing a broker's services, the business seller is saving money on commission fees and may be wiling to offer a lower price. , A letter of intent indicating your commitment may also be required by the buyer.
While business brokers can provide letter of intent templates, you can locate them online or in business buying books. , Ensure that the owner has acquired a wide variety of clients responsible for revenue, then look for consistent growth and steady sales with short accounts receivable time frames.
Many brokers analyze this information before listing a business for sale, but without a broker's assistance you must do it yourself.
Find assistance from small business consultants at your chamber of commerce office. , A certified public accountant is the best person to determine the accuracy of the business' financial statements.
A business broker will usually contract accounting services when conducting a transaction, but you can locate a qualified CPA through your chamber of commerce. , Always verify that existing agreements for real estate, equipment and inventory are transferable to a new owner.
While some business brokers can review this information for potential buyers, an attorney is the best person to help with this process. , Ensure the business doesn't have employee lawsuits or consistent claims against the operation by current and past employees or government entities.
Some business brokers may include this research in their fee but you can find this information yourself by contacting your state employment office. , If you choose to move forward with a purchase offer, have a business sale contract ready.
A business broker's main purpose is to prepare contracts during a sale.
However, you can handle this step by hiring a lawyer who specializes in creating business contracts.
Your sales contract will describe what you are willing to pay for the business. , Without a business broker, you will be responsible for negotiating a final offer.
Be ready with a backup contract that ensures you get a good deal while making the owner happy with the purchase.
New contracts can be obtained through your attorney. , Once all parties agree on a price, take the sales contract to a notary.
Next, transfer all other legal agreements into your name.
Conclude the sales process by following the transition schedule you and the business owner have agreed upon.
About the Author
Karen Kennedy
A passionate writer with expertise in creative arts topics. Loves sharing practical knowledge.
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