Buying a business can be an excellent way to get started in the small business world or to expand your existing operations. Benefits to this approach include avoiding the hassles of infrastructure-building and immediately accessing the value that comes from an established client base.
You have 2 primary options: buying a standalone business or buying into a franchise. With the former, you gain complete ownership and full control of the operations and business decisions. The franchise model provides a host of resources and powerful support, but you’ll also lose autonomy. You may also find that corporate headquarters often determines many aspects of your business.
Carefully consider the pros and cons of both these routes—this way, you can identify which option best aligns with your goals.
That’s a great question. We’re coming out of a pandemic, so buying a business now might seem to some like an overzealous move. However, there’s never a perfect time to buy a business. If you were to do it tomorrow, you’d likely face challenges related to the economic and cultural impacts of COVID-19—but you’d also enjoy some current benefits. For example, you might be able to acquire financing at lower rates. And the competition within your industry could be less intense than it might be during an economic boom.
“Realistically, it’s not about timing—it’s about you,” says entrepreneurial guru Brian Scudamore. “Only you have the power to create your own success story, and that takes a certain type of person. It takes grit, it takes guts, but most of all, it takes vision. You have to be all in, and you have to really see the big picture. Starting and growing a business is always going to take hard work, rolling up your sleeves and putting in the hours…Sure, it’ll be scary and there will be a huge learning curve, but the time is going to go by anyway…so where would you rather be a year from now? Still daydreaming about being your own boss, or 12 months into building the life of your dreams?”
Are you ready to make it happen? Are you confident enough to put your all into this decision? Before you answer these questions, you need to formulate a plan.
There’s no way to proceed confidently with a business purchase unless you have a plan. And the process of creating your plan will make it possible to determine whether or not the timing is right for you.
The best way to build your business plan is to answer questions related to your motivations and goals. Here are some possible questions to think about:
You won’t have all the answers up front—research and review will be required for clear answers. But you should start the process now in order to proceed when you feel the time is right.
“Research and analyze your product, your market, and your objective expertise,” explains a business report from the Houston Chronicle. “Consider spending twice as much time researching, evaluating, and thinking as you spend actually writing the business plan. To write the perfect plan, you must know your company, your product, your competition, and the market intimately.”
Once you’ve compiled your business plan, you’ll be able to confirm your choices regarding timing and whether you should buy a business or take the franchise route. A business plan is a living, breathing thing—you’ll want to revisit it regularly to make sure it reflects your current situation and aligns with your future goals.
If you’re ready to move forward with buying a business, your business plan will be your north star and your meal ticket. From lenders to franchisors, everyone will want to review your plan to assess your expertise and commitment.
The most popular way to fund a business purchase is through debt financing. You should start by checking out various business acquisition loans, which can provide up to $5 million and fund in about 30 days. Interest rates start around 5.5%.
It’s definitely helpful to have a trusted mentor throughout the business buying process. If you don’t already have such a mentor, you can look for candidates within your network or reach out to your nearest SCORE office to connect with someone who has walked this path before and can guide you along the way.