Buying a business is an exciting opportunity, but it’s important to approach the process with clear goals and a solid understanding of what it entails. At Sharp Business Brokers, we’ve guided many successful transactions, and we want to share a few key reminders that will help streamline your business search and ensure you make an informed decision. Here’s what you need to know before taking the plunge.
Before diving into the market, ask yourself the following questions to narrow down your search:
Having clarity on these factors will help you focus on the types of businesses that align with your skills, interests, and goals.
It’s essential to have a realistic understanding of your financial capabilities. Consider these important questions:
These questions will help you set a budget and ensure that you are looking at businesses within your financial reach.
While it’s possible to secure financing, you’ll still need substantial capital upfront. Sellers typically expect full payment at the time of sale, and while seller financing may be an option in some cases, most sellers will require a down payment of 70% to 90% of the sale price. Understanding this upfront will help you plan accordingly.
For those who may not have the full capital available, SBA loans are a great option. These loans often require only a 10% to 20% down payment, making them more accessible than other types of financing. We work with preferred SBA lenders and can introduce you to a loan officer if you are interested in exploring this option.
It’s important to note that obtaining an SBA loan is not a simple process. To qualify, you’ll need:
This comprehensive process ensures that you are financially capable of managing both the business and the loan.
Some businesses require specific licenses to operate. For example, contractor’s service-related license or medical spa practice license may be necessary. Failure to have a license in place could also impact your SBA loan eligibility, so it’s important to verify what licenses are needed before proceeding.
Many small businesses are owner-operated, meaning that the owner plays an active role in day-to-day operations. If you are considering purchasing a business, it’s important to assess whether you have the industry experience and hands-on involvement required to run it successfully. Passive investors may find these businesses less suitable.
For most businesses, the involvement of the owner is crucial. Relying entirely on employees without the owner’s engagement can present challenges. You’ll need to assess whether you are prepared to dedicate the time and effort required to manage the business or if you plan to hire someone to run it. Passive investors may not find businesses requiring owner’s hands-on suitable.
Purchasing a business isn’t just a financial investment, it’s a personal one too. Success in taking over a business requires dedication, consistency, a willingness to put in the work, and a commitment both financially and personally.
Buying a business is a big step that comes with great rewards, but it requires careful planning and preparation. By answering these key questions and understanding the financial and operational commitments involved, you’ll be better positioned to make a sound investment. If you have any questions or need guidance throughout the process, don’t hesitate to contact us at Sharp Business Brokers. We’re here to help you navigate the business buying journey and ensure your success.
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