It’s common knowledge that the startup phase of a business can be a real pain in the neck. It’s exciting, but also a lot of work. Sometimes it’s just easier to buy a business that has already made it out of the startup wringer.
In fact, there are several benefits to purchasing a business. Here are a few to whet your appetite:
Why Buy a Business
When you buy an already-functioning business, you hit the ground running, which allows you to leverage your resources and expertise to expedite the growth—getting you further faster.
Another benefit is that financial institutions like to fund business acquisitions. Why? Because there’s already decent collateral, a track record, and a stronger promise of growth. If you’ve struggled in the past to finance your ideas, you may have more luck financing an acquisition.
Choosing the Right Business
If you plan to acquire a business, you probably have an idea of the kind of business you want. You may have no idea–that’s OK too. Sometimes the types of business you want aren’t available in the market. Also, there are often hidden pros and cons to owning particular kinds of business.
It’s crucial to take into account these considerations when deciding to purchase a business:
Does the product or service excite you enough to put in the long hours required to maneuver the ownership transitions successfully?
Are you taking over an operation that’s already generating cash flow and profits?
Do you have an established customer base and reputation in the industry from previous experience, or are you going in cold?
Do you have existing employees who are familiar with all aspects of the business and can help with the transition?
Have you already built a successful formula for running the business, including procedures, systems, and policies?
These are crucial questions for any aspiring business purchaser. If you can find a business in an industry you love and have experience in, you’ll be much better off.
If you have no experience running a business in that particular industry, you’ll want to learn about the current lifestyle of the owner. Is he/she working overtime to keep the business afloat? What’s the daily routine? Be sure you acquire a business that gives you a lifestyle you want.
Once you’ve got your sights set on the prime property, it’s time to talk money.
Financing Your Business Purchase
As we mentioned earlier, it’s a little easier in some ways to finance a business acquisition. However, that doesn’t mean you should settle for a mediocre loan acquisition experience.
Traditional loans are great for people who have shiny credit and the perfect business to acquire, but they also take a long time to get going. Traditional applications can take days–even weeks–to finish because of all the documentation needed.
Marketplace lenders like Lendio make the application process streamlined and easy. Our application, for example, only takes 15 minutes, and it gets your business in front of more than 75 lenders. Our applicants generally start receiving offers within 24 hours.