2021 Opportunity of Buying a business by Crispen Breslin
Owning a business is one of the best ways to create lasting wealth and freedom. Buying an already established business will allow you to avoid the often volatile start-up period while still allowing you to run a good business.
Advantages include: You’ll significantly reduce the start-up time, the product or service already marketed tested, the brand may be established, Easier to secure financing and access to a pre-existing customer base.
It’s not easy to start a business from scratch. My first entrepreneurial venture was working with my fathers in my outdoor media business. I learned how to talk to business owners and how to solve problems for business owners. I later started my own creative agency in college which I ended up selling to a larger player. Looking back, what if I had bought other outdoor media businesses or creative agency and leveraged the reputation and customers they’d already established? I didn’t have the money to do that, but here’s the thing: In some instances, it is possible to buy a profitable business without having any cash, credit, or experience. Rather than starting from nothing, it’s much easier and quicker to take something good and make it great — plus it’s less risky.
Here’s how to buy profitable businesses without spending your own money.
Choose What Type of Business You Want to Buy
The best opportunities are small companies earning between $1 million and $5 million a year in revenue. with simple business models But the best sector is the one that speaks to your interests and experience. You’ll want to consider if the business’s products, services, and goals align with your interests. If you don’t want to manage the day-to-day operations yourself, you can hire an experienced professional or promote from within the company while the owner is still around to train them. You can usually find someone doing the same job for another business and incentivize them to leave their salary for equity in your company. consider whether the business has opportunities for improvement,
Find motivated sellers.
It’s crucial to find business owners who want to move on and are motivated to sell. Many baby boomers are ready to retire.
Most businesses sell for a multiple of the profits. For example, one that’s earning $100k will sell for three times that amount. You can find these businesses the same way you would find buyers and sellers in real estate— through social media marketing or networking, for instance. It’s simply about changing the conversation and putting yourself out there as an investor looking for opportunities. Here are some of the most common reasons why business owners sell their businesses: Company isn’t making enough money, burnt out, pursuing other opportunities, the Business owner is looking for a change, the Business owner is retiring, relocating
Conduct Your Due Diligence
Doing your due diligence when you want to buy a business is more than just background research on the company. It’s a full dive into specific financial and legal aspects of the business, a step that is best taken with the help of an attorney and an accountant. Doing your due diligence means investigating everything from business financials to customer lists and even furniture.
Secure funding & Close the Deal
After you have valued the business, and you and the seller settle on a number, the next step in buying a business is to get money for the purchase. There are several methods include seller financing, debt financing, and many creative alternative options to avoid paying money out of pocket. f you can find experienced investors to loan you the money in exchange for equity, you can use the profits from the business to cover payments. Etc After all the blood, sweat, and tears, you’re finally at the point of closing the deal. Like with most steps in buying a business, there are some key documents and agreements you’ll need to complete the process.
My take away
There are many advantages to buying an existing business. It’s the fastest way I know of to creating generational wealth.
Whether you should do so will depend heavily on your situation, financing options, and the type of business, to name a few examples. I suggest taking time to consider all your options prior to making a decision so that your business venture is a rewarding one!