7 Steps to Buying a Business
Steps to Buying a Business
Buying a business requires planning and an organized approach. Many Business Buyers that are Buying a business in South Carolina or Florida businesses do come from out of state. I am a Business Broker focused in both South Carolina and Florida. Prior to being a business broker I started and owned my own business and purchased 8 businesses to to supplement our organic growth. The last 2 business I sold about a month ago had both business buyers from “up north”. The steps to buying a business can vary depending upon each individuals situation and goals. Below are some steps that may apply to many business buyers.
1. Have you had “the talk” with your significant other?- Have you discussed your thoughts, ideas with your significant other? Does buying a Florida business mean a relocate? If so how does that affect those most important around you? I started and owned and sold my own business and to think about making any of these decisions without my wife is unthinkable. I work with a lot of potential business sellers, and when I ask if they have discussed with their wife of 10-20-30 years and they say no, I know that the decision still has further steps to take.
2. Consider your capabilities. What are your realistic financial means to buy a business. Do you need a business that offers Seller financing or do you plan to seek financing from a bank or other? What is both your true skill set and what sort of businesses do you have an interest in. And, do you have the financial capabilities to buy such a business, and or or their technical or license requirements that could me met by you.
3. Geography- both South Carolina and Florida are big states! Are you looking to buy a business in a certain part of the state or ok for most any part of the state(s)?
4. Start Looking around. It’s easy from anywhere in the world to jump on the internet and search for a South Carolina or Florida Businesses For Sale. This is a very easy part of the process. But how do you advance your search from casual looking around to trying to reach a goal of for example wanting to buy a business within 6 months. For every hundred of people that “look to buy a business” only a few actually do. Looking thru websites is generally a free and fairly benign exercise. Engaging with someone that understands the South Carolina or Florida market advances your efforts from “looking around” to trying to fulfill a goal. Contact a business broker and have a dialogue and seek out assistance from someone that engages in this process on a regular basis, and understands the marketplace.
5. The vetting process. Getting information from the internet on businesses for sale can provide certain minimal information. To receive detailed info confidentiality agreements will be signed. Expect information exchange to be a “2-way street”, you will desire information on a business sellers business including financials, company background and history. A business Seller will require information on you, including your financial capabilities and your background.
6. Meeting with the Business Seller. A Business buyer can “meet” a business owner via a phone conference call, but a face to face visit with the owner will allow both the prospective business buyer and Business Seller, to either develop a comfort level to move forward or move on. A successful meeting could result in a contingent offer being generated/presented.
7. Generating a business offer to Purchase- After finding the business that meets your requirements, an offer is generated and presented to the business Seller. At times an LOI (Letter of Intent) may also be utilized. The business Seller has the option to accept, reject or make a counter offer.
If accepted, due diligence is pursued with the goal of satisfying the wants of the business buyer and reaching a business closing date whereas the prospective business buyer achieves the goal of being a business buyer. The steps to buying a business can vary greatly. Having an organized approach and realistic expectations can go a long way towards finding and buying the right business.