Buying a Small Business For Sale & Where To Look
Investing in a small or medium business for sale can be a great way to start a career and become an entrepreneur. We look into where you can find these small businesses ready for sale.
Becoming an entrepreneur has become very realistic and easy in this day and age. According to Forbes, the entry barrier to becoming ‘an entrepreneur’ has never been as low as today thanks to the internet and the easy way to connect with many people in a few seconds. There are many ways to be an entrepreneur whether you launch a business yourself, partner with someone, or buy a small business online.
Buying a small business is an ideal way to streamline a path to a career and bring in a steady income. As opposed to starting a business from scratch, buying a small business is less risky and can be profitable in the early stages of the brand is already successful and established - you just need to know where to look.
If you’re considering investing in a small or medium business for sale, this article will guide you on finding the right ones and the types of small businesses to buy, as well as the pros and cons of investing in small and medium businesses.
Where to find small and medium businesses for sale
Before you begin looking for a business to purchase, consider the industry you want to delve into and the businesses around your local area. There are many ways to find small and medium businesses and it can easily be narrowed down when you consider what type of business interests you, what type of business is trending, or what business your area may be lacking in.
There are many ways to discover businesses, you just need to apply the best option to suit your investing goals:
Speak with business owners
Are you interested in buying a local business or a competing business in your industry? Do you want to enter into a new industry you feel passionate about? One of the best places to get a feel of the business is by speaking to the business owner directly. Do the research of the business, ask customers and get a feel of the overall business environment. When you find a business that you want to pursue further, reach out to the owner and discuss the opportunity of purchasing their business directly.
Hire a business broker
Business brokers are specialists in connecting businesses with potential buyers. With many years under their belt, they connect small to large businesses who want to sell, to those who want to buy. A business broker understands the market and knows the right questions to ask a company to get the best information for the potential buyer. They can also provide insight into the history of the business and look into further research for the potential buyer.
Look online for business opportunities
There are websites that show listings of many businesses for sale. You can use this as a directory to find potential businesses ready to sell or reach out to the businesses there. You can sort by industry, location, and even price to better narrow down the options.
Buying a business vs franchise
It’s not just big and small businesses available out there to buy. There is also an option to purchase a franchise of an existing business and operate under their brand. Heaps of franchises are always ready to work with a buyer, common ones in New Zealand are Coffee Club, Dominos Pizza, Hells Pizza, F45 and Anchor to name a few.
Running a franchise has its advantages as well as factors to consider before buying a franchise. The main advantage is the support you’ll get from an already established business. Everything is laid out for you in terms of the company’s processes, value, systems, and marketing materials. The only difference between buying a small business versus a franchise is that there are limitations to what you can do when under a franchise. Rules and regulations are set in place that has made the business work and straying away from it can damage the relationship between you and the franchisor. This might not be ideal if you want to build a unique business or want more influence on the systems within the organization.
Before you get started
You might be tempted to dive right in and buy your favourite business, however, it's important to ask yourself the following questions before you start investing:
- How much time do you have? Are you going to be taking care of this business from sunrise to sundown, or more hands-off and letting staff do the work?
- What is your expertise? How much do you know about the business and its industry? Is this a business that you can grow long term with proper planning and research?
- Who will you need to hire? What kind of staff are you looking for? How many hours will they need to commit to the business?
- How will you fund your investment? Do you have a funding plan in place? A loan?
You don’t need special certifications to purchase a business, however, there is an extensive amount of planning and due diligence you have to do to make sure your business and investment is right for you. When you’ve selected the business, be sure to look into getting a lawyer on retainer to help negotiate the sale and handle various contracts related to the transition. This extra assurance can give you peace of mind and help your business investment in the long run.