While some entrepreneurs love the challenge of building businesses from scratch, it’s certainly not your only route. If you know how to buy an existing business with no money, you can step right into an easier situation where the infrastructure has already been laid out, the operations streamlined, and the customer email lists compiled.
There are 2 main options when it comes to buying an existing business:
The business model: With this approach, you find a business that someone else has already built. When the sale is finalized, you become the new owner and have total control of business operations.
The franchise model: If the idea of independently running a business sounds overwhelming, a franchise might be right up your alley. Rather than buying an existing business, you’re buying into an established business operation. Corporate headquarters will provide you with ample support and resources, but they’ll also dictate how you run your business.
If you want to purchase an existing business, as opposed to a franchise opportunity, you’ll need to research the potential business and carefully analyze how it performs relative to its industry competitors. This step is always easier if you already have experience in the industry and understand the operations of the business.
The most important aspect of your due diligence will be the health of the business. How has it performed in the past? How is it currently performing? And how will it perform in the future? You need to find a business that’s on track for success, rather than a fixer-upper that will present a disproportionate number of risks.
When you’ve found the right business to purchase, it’s time to lock down the necessary funding. Multiple debt financing products can work in these situations, but business acquisition loans are usually one of the best. They’re specifically designed to help entrepreneurs acquire businesses, providing as much as $5 million with borrower-friendly rates that start at 5.5%.
When you apply for a business acquisition loan, lenders will want to know as much as possible about the business. They’ll ask you to provide documents of its financial history and current value. Also, you’ll need to prove you’re in a position to help the business succeed. This requirement means lenders will consider your personal finances as well as your business plan for creating sustained success as the owner.
The important thing to remember is that it takes time and effort to buy an existing business with no money. Always allow yourself the breathing room to properly research the industry and select a desirable business that’s for sale. And never rush the application process, as an airtight business plan could be your golden ticket when you submit your loan application.
As long as you give yourself enough time to carry out the process carefully, you can get great results. As the old saying goes, “Fortune favors the prepared.”
Our goal is to help small business owners have all the tools and knowledge possible about loans. We’ve connected to hundreds of banks to keep you up to date with the best loan offers and options for your business!