If you’re ready to purchase an existing business, here are the steps you need to follow:
Find the right business. As explained above, finding the right business to buy may be the most challenging part of this process. You first need to identify a business for sale that meets your criteria.
Negotiate the price. You can then contact the seller or work through a business broker to negotiate a price. Though the business owner doubtless has an amount he or she would like to get for the business, you need to consider other factors like your budget and any challenges the business may face and give a counter offer.
Sign a letter of intent. The next step would likely be your expression in written form about your intention to buy the business at an agreed upon price. But don’t get too excited. You’ve still got a few steps before the sale goes through.
Do research and due diligence. You need to do some research to figure out if the business for sale is a good investment or too good to be true. Look at cash flow, reputation, location and other factors. You should also look at an assessment of the business’s assets and liability.
Secure financing. If you don’t have the cash on hand to buy the business out right — and not many small business owners or potential small business owners do — you may need to secure financing from a bank or other financial institution. Some small business owners may offer owner financing and that’s something you will need to look into while researching the deal.
Close the deal. Once the price has been negotiated, the due diligence and research done and the finance secured, it’s finally time to close the deal and buy your business. Here again you may want to hire a business broker or sales agent to help out.