You want to become an entrepreneur. However, you don’t want to start from scratch. Rather than spend years building something that could potentially fail, you want to go the smart route of buying a pre-existing business and putting your own touches on it. So where do you start? How do you figure out the ins and outs of buying a business? If you’re new to the concept, don’t get overwhelmed. Even if you don’t know how to buy a business and are only in the beginning stages of thinking about it, there are a few basics you need to start with. With cash in hand, you’ll be able to have your pick of promising businesses that are looking to offload. However, if you’re not careful you could also end up getting conned. That’s why it pays to be extra careful when shopping for your new business. Before you buy, here’s what you should know.
It might feel awkward to just pick up the phone and start cold-calling places that you’re interested in. But consider this: There are worse ways to find a business that’s ready to sell for a fair price. Sure, you could wait for a business to come to you, or travel around your area looking for places to make a pitch to. However, getting on the phone and setting up a few meetings with business owners who are still on the fence could help you make a killer deal. If someone is ready to sell, they’ve most likely already listed their business and settled on a price. However, getting someone who might sell to the right person but needs a bit more convincing could put you in a sweet spot when it comes to finding a business that’s ripe for takeover. Why compete against a ton of other prospective buyers when you could buy a business for a price that you’re happy with?
Use a Broker
As with real estate, it sometimes helps to trust someone who knows their way around the marketplace when you’re looking to buy. Using a business broker could get you in the door when it comes to finding places that are ready to sell at a great price. Brokers are there to help facilitate a sale, from which they’ll take a cut. However, it’s always best to trust your own instinct first. Remember that you and your broker are not in business together and that your broker has other clients to look out for. If you have your heart set on a certain business, there’s no reason to wait for a broker to come along and facilitate an introduction. Instead, think about taking the initiative yourself. A broker can be great for helping you to get a sense of market trends, but when it comes to the final sale, always go with your gut.
Before you buy, it’s a good idea to spend some time doing research on market trends. Take account of all the factors at play here: Where do you live and where are you looking to buy? Are you trying to ride the wave of a specific trend? If so, consider the long-term outcome. A few years ago, frozen yogurt was all the rage. Today, it’s considerably less of a safe bet to open up or invest in a frozen yogurt business. While you might think you have a good sense of what’s to come in terms of trends, it helps to bolster your five-year plan with a bit of actual marketplace knowledge. Don’t invest your money in a safe bet that feels a little too safe, and try your best to predict how your business will fare in five, ten, and even twenty years. You’re in this for the long haul, so don’t be too hasty when settling on a business to buy.
If you’re ready to buy and don’t want to waste a lot of time searching around, going online can be a good way to find businesses that are ready to sell. While cold calling might be a good idea, it’s also nice to do business with an owner that’s ready to sell and has put his business in order. Someone who’s been thinking about selling for a while is going to have things much more easily organized and ready for a takeover than someone you’ve just convinced to sell. Checking online for businesses that are up for grabs is also a good way to tell what’s trending upward versus what business owners are trying to quickly unload.