11+ Best Business to Buy | Buying an Existing Business Checklist
Best Business to Buy
In today’s modern society, owning and operating a business has become more and more mainstream, and the possibilities of what can be done with a business are endless. With the right amount of dedication and work ethic, you could have a successful business venture in anything from rental properties to restaurants to luxury boutiques- the possibilities are endless!
Think about your own personal passions and what you’re good at. Think about what you like to do in your spare time, those things that come naturally to you.
Buying an existing business can be a rewarding experience. It can be a cost-effective and profitable way to make a career change or diversify your skills. However, as with any other major purchase, buying a business comes with its own set of risks.
There are many things to consider when evaluating a business to buy, but the three most important are the product, the supplier, and the customer. That being said, the business needs to be profitable, legal, and have future potential.
Deciding what type of business difficult as it is dependent on your interests, among other things. Here is a list of the Best Businesses to Buy:
1. Buy A Franchise Business
There are many advantages of owning a franchise. You will benefit from the franchiser’s well-known brand while basically running your own company. The most profitable franchises almost never fail, eliminating the risks that come with starting a new company.
Operating a franchise would require a decades-long commitment, preferably longer — you can’t run a store for a year and then quit. McDonald’s, for example, has a 20-year franchise term. Since buying a franchise is a long-term investment, choose a company that piques your interest in the long run.
Make certain that you are willing to stay for an extended period of time without pursuing any time-consuming obligations (such as an additional career). If you believe you would want to quit in less than ten years, choose a brand with franchises that are easier to sell.
Franchises aren’t just for fast food joints and coffee shops. This business structure can be seen in almost any product or service category. You may start a franchise in tutoring or college prep, janitorial or cleaning services, restaurants and retail, health and wellness, and various other fields.
The cost of a franchise varies widely depending on the market and business model.
During the appraisal process, entrepreneurs who choose to buy a franchise must consider their financial limitations and the franchiser’s support system.
The cost of a franchise varies widely depending on the market and business model. Any franchiser needs a one-time fee. This can vary from a few hundred to tens of thousands of dollars.
There are four major cost criteria to remember when buying a franchise:
- Initial investment – The initial investment would cover the supplies, labor, and energy needed to get started. The franchise fee is often included in the initial investment figure
- Franchise fee – Almost any franchise opportunity necessitates the payment of a one-time, upfront franchise fee.
- Personal finances – Certain franchises require the owner to have a certain net worth before buying a franchise. Others have specific liquidity criteria.
- Continual investment – This is the money you’ll need to keep the franchise running regularly.
2. Buy an Ecommerce Business
Purchasing an e-commerce company is exciting, but it is also very risky. You’re making a significant financial commitment, which means there’s a high risk of failure if you buy rashly.
Buying an online product shop site gives you all of the tools and information you need to start your own online business from home. You will also have access to unique products which may not be available elsewhere through traditional means.
3. Buy A SaaS Business
There are many potential advantages of purchasing a SaaS business. Perhaps the most obvious one is the fact that you don’t have to worry about obtaining a physical space or hiring and training employees.
You may need less startup capital since your only costs will be the initial payment for the software. The low cost of this kind of business could mean that you won’t need to find outside investors, either.
SaaS businesses require relatively little maintenance. You won’t need to worry about ongoing software upgrades. Your first year or two in business should be spent focusing on your marketing and sales strategy.
4. Buy Income Generating Blog Websites
With a blog, you can create online interest in your brand. You can then use that interest to expand the business and increase revenues. The hard part is finding a good blog niche that has some purchasing power.
Don’t buy a blog website that is quite expensive; you’ll be better off starting a new site altogether.
You should try to keep your costs as low as possible when you buy an existing blog. A good rule of thumb is that it shouldn’t cost more than $30,000. You’ll have to think of your goals and the niche that interests you. You need to know what you want to achieve.
There are numerous opportunities when it comes to selling advertising space on a blog. It’s possible to make more money in one month than you would make in a year with an advertising banner or squeeze page.
The simple strategy is to have diverse monetization strategies like display ads, sponsored posts, sell a course, digital products or fill out as many sites as possible and earn affiliate commissions from those purchases.
Buying an online media site will allow you to earn revenue from the traffic that you gain through informative articles, videos, and podcasts. This service is completely free for anyone who posts content on the site, and there are no monthly fees involved.
Buy A Software Business
If you’re an entrepreneur with programming or web development skills, you can buy a software business. You’ll be able to create a variety of different products and sell them online. You control the business, and therefore your profits will be completely yours.
6. Buy Online Gaming Business
Online gaming is big, and it’s growing all the time. The technology is constantly improving as people upgrade their computers for better graphics, which means that consumers are becoming more interested in this type of entertainment.
7. Buy A Start-Up
Buying a start-up company can be risky, but it also has its advantages. You can gain access to a much larger established customer base, and you can have more control over the management of the company.
8. Buy A Social Networking Website
Social networking websites are popular, and they can be very profitable if you know what you’re doing. If you’re a marketing genius, you will attract a lot of attention from your customers.
Internet marketing services can be provided in a variety of ways, including online banner ads, search engine marketing, email marketing, and affiliate marketing. Choose the type of service that works best for you, then develop a strategy for it and get moving!
9. Buy A Blog Directory
A blog directory is an excellent niche for a website. You can build customer traffic with your blogs and then link to other sites that will help you to earn money. This is one of the most effective ways of making money online.
As you can see, there are many different ways to make money online. It doesn’t take much capital or business savvy to kick off an online business, and it can pay off big time if you choose the right niche.
Buying a web directory gives you instant credibility. You’ll be able to create an authority page on your site that can drive traffic and generate sales. The key is to choose the right directory to use and make sure that it is reputable.
10. Buy A Membership Site
Trying to sell a product one by one without an online support system is very difficult. Buying a membership site can help you to run your online business from anywhere in the world.
When you own a membership site, you will charge for access to the site and keep all of the profits. If you have a good product, you can have a very successful membership web.
11. Buy A Software Business
Selling software through a website is much easier than it used to be. There is now a variety of places where you can sell software online, and it’s easy to do.
12. Buying an Agricultural Business (Farm)
The best business to buy is a farm. A farm is a great way to bring life into the neighborhood. The farm will produce beautiful flowers, delicious vegetables, and fresh eggs. The farm will bring a sense of community to the neighborhood and allow people to live in a greener environment.
Buying a Business Vs. Starting a Business from Scratch
Why Should You Buy A Business Instead of Starting from Scratch?
Starting your own business can be a great idea, but it’s not for everyone. If you’re someone who knows what they want to do from the get-go and has money to invest, then starting your own business is probably the way to go.
But if you’re someone who needs guidance or doesn’t have much money to start with, buying an existing business might be more beneficial.
Buying an existing business will allow you to hit the ground running without all of the hard work that comes with creating one from scratch.
There are key reasons why buying an existing business is more beneficial than starting from scratch;
1. Starting A Business from Scratch Is Risky and Time-Consuming.
Starting a business from scratch will mean that you have to research your industry thoroughly, get the right business licenses and permits, find customers and suppliers, hire employees to help run the business, market your product or service, and more.
You could put in hundreds of hours into researching your product, vendors, and employees before you even turn your first profit while starting a business from scratch.
Starting a new business from scratch always comes with stress and risk no matter how well you plan for it beforehand, simply because there’s still no guarantee that you’ll be successful.
If you’re starting a business from scratch, it will most likely take you at least a couple of years before you start seeing any profit. If you decide to sell your business at the end of those 2 years, the chances are that you won’t make as much as if you had bought an existing business, to begin with.
2. Existing Business Is Already Generating Sales & Profits.
Unlike a new business, an existing business already has the sales and profits that it needs to support itself. It’s already generating revenue, salaries for employees, and expenses.
Although you’ll need to do a little work (don’t expect the same level of growth that you do with new businesses), the work won’t be as time-consuming as if you start from scratch.
If buying an existing business allows you to generate similar or better growth than what would be possible if starting a new business, then that’s a big advantage.
3. Existing Business Has A Track Record.
We all know that starting a new business is risky, but buying an existing one eliminates some of that risk. When you buy an existing business, there’s already a previous owner who will be able to share the risks & rewards with you.
They will also give you advice on how they grew the business and any challenges they faced along the way. Having this information and help from a previous owner can be extremely useful when it comes to keeping your business running smoothly and growing it from there.
4. Existing Business Has A Brand Name.
If you’re looking to buy a business that’s already established and growing, you might be interested in buying one with a well-known brand name.
People are more likely to trust a brand name than an unknown one, so if you’ve already got sales coming in for your new business, it can be extremely useful to buy an existing one instead of establishing a new one from scratch.
This can be extremely helpful for getting customers interested in your products or services. Unlike starting from scratch, you don’t have to do any marketing to build up a brand name for your new business.
5. Existing Business Has Infrastructure in Place.
Buying an existing business will allow you to take advantage of the infrastructure already in place.
You won’t have to worry about employing new staff, buying new equipment, doing renovations, and other tasks required to operate a business.
This saves you a lot of time and money that would’ve been spent on building the infrastructure from scratch. The reason why infrastructure is important is that it increases the productivity of the employees who work for your company.
6. Legal System and Tax Obligations
Existing businesses are already covered by the legal system & tax laws. This means that you’ll never be caught with your pants down due to a lack of knowledge about the laws.
You can rest assured that if something goes wrong, the legal system will take care of it. You won’t have to worry about what you’re going to do if your business gets sued or audited.
No matter what industry your business is in, buying an existing business has its advantages over starting a new one from scratch. It’s cheaper, more secure, and just as productive.
7. Existing Businesses Easily Access Loan/Funding.
This is another great reason for buying an existing business. You can access loans offered by banks and other financial institutions to get your business started. This essentially allows you to turn your profits into cash right away so that you can use them to help grow the business.
8. Existing Business Is Already Set Up & Ready to Grow.
If you buy an existing business, you won’t have to spend days or weeks setting it up like you would when starting from scratch. The work will already be done.
Although you might have to do some work to make the business more profitable, the chances are that you won’t have to put in hundreds of hours of work like you would if you started from scratch.
You also don’t have to worry about things like getting all the right licenses and permits, finding suppliers & customers on your own, or finding employees.
9. Existing Business Allows Control Over the Growth.
Once you buy an existing business, you can take ownership of it and do whatever you want with it. You can make adjustments to it and turn it into a success without worrying about how other people in the company feel about your decisions.
10. Established Customer Base and Market Share.
Existing businesses already have a customer base. You can capitalize on the existing customer base and grow the business from there.
11. Proven Business Model.
An existing business will already have a proven business model that you can follow in order to succeed with the business. This is crucial because it saves you a ton of time and money.
12. Trained Employees and Established Vendors
When you buy an existing business, you can bring in the employees and vendors that are already working with the business. This means that they know exactly how to work together and get things done. You’ll be able to start using them immediately.
Step By Step Guide To An Existing Business
How Do I Purchase an Existing Business?
Step 1: Find A Business to Purchase.
Choosing the right form of business for you is the first step in purchasing the ideal business. The best place to begin is with an industry that you are both familiar with and understand.
Consider the different types of companies you’re involved in and which best complement your skills and experience. Consider the size of the company you want in terms of staff, number of locations, and revenue.
While you may not know every aspect of a certain type of business, there are resources – such as discussion boards, articles, and courses – that can provide you with insights into what to look out for in terms of which businesses may not be the ideal one for you.
Once you have picked an industry that you plan to work with, it’s time to find an available business. The first thing you want to do is look at similar-sized businesses and compare them. Also, someone who has put in years of work and experience in the industry you want them in and want to sell the business.
Step 2: Value the Business.
With this information, you can come up with a reasonable figure for what the company is worth. You’ll then want to look at how much comparable businesses were sold to determine whether this figure is high or low.
Consider that the amount you are willing to pay a business owner for their business is an investment. You are taking on a job that will have long-lasting consequences on your future, so don’t be afraid to pay to get the job right.
Step 3: Do Comprehensive Due Diligence.
Once you’ve determined that the business is worth what you want to pay, it’s time to do comprehensive due diligence. This consists of asking questions to the current owner of the business to determine if you want in.
Start with a list of questions that get into the details of how they run their operations, why they’re looking for a buyer, any legal issues they have been involved with, etc.
Ensure that the business is operating as per book and that there aren’t any legal disputes or liabilities arising from questionable transactions.
Step 4: Negotiate A Purchase Price.
Now that you have value in mind, it’s time to approach the owner. You will begin your discussions by giving them your personal valuation and worth of the business and explaining why you believe that it is worth the amount.
Consider the amount of time that the business has been in existence and how its future will be affected by your involvement. If there are no factors that would make your purchase beneficial to the business owner, it’s best to walk away and find another company.
Step 5: Submit A Letter of Intent (LOI)
After you have come to an agreement on paying for the business, you are then able to submit a Letter of Intent. The LOI outlines what you are willing to pay for the business and the details of your purchase.
The owner will be able to look at this and decide if they would like to continue with the sale from there. If they agree, it’s time for them to draw up their own contract that will include a few of your conditions according to what was mentioned in the LOI.
Step 5: Negotiate the LOI and Sign the Contract.
Once the contract is drawn up and includes your desired conditions, it’s time to negotiate it. The owner will want to make sure that they are getting as much money for their business as they can to attract someone who will be willing to pay a fair price. This is why it’s important for you not to agree to a contract without some negotiation.
To go ahead with your purchase, you’ll need to write a sales agreement. In this, you’ll outline the amount of money that you plan to pay for the company and how much longer it will take to pay it off.
Note that It’s highly recommended that you secure financing before completing a purchase of any kind, especially when purchasing a company. To do this, you’ll need to be prepared with your personal financial details as well as the information on the company that you plan to purchase.
The financing process will take a while to complete, so be patient.
Step 6: Finalize Purchase Agreement & Close the Transaction.
Once you have agreed on the terms of your contract and you have signed it, the process is finally complete. Make payments and Secure the transfer of ownership into your name from the previous owner or owners.
Buying an Existing Business Checklist
Finding the right business to buy is not always an easy process. There are a lot of factors to consider before purchasing an existing business. When buying an existing business, many factors need to be considered before you go ahead and buy an existing business. They should be aware that there are risks with buying an existing business:
There are many decisions to make if you are considering buying an existing business. This checklist will help you identify some of the questions you must ask before making a purchase.
If you are in the process of buying an existing business, here is a checklist of things to consider:
How long has the business been in business?
The history of the company will affect how much you pay for it. You should ask about the company’s founding, what their plans were when they first started it, and how many years the business has been in operation. The longer a business has been in operation, the more likely it is to be profitable.
Is the business profitable?
If the business is not profitable, it may be impossible to turn it into a profitable business.
What is the balance sheet look like?
You should get a balance sheet and ask for detailed information.
What is the profit margin?
You should find out how much the business will cost you and in what time period you can recover your investment.
What is your business’s cash position?
The business cash flow statement will provide you with insight into the sources and uses of cash within the business, as well as any activity from investing or financing.
What is the current debt load?
You should ask about all of the debt on the business. You should also check with other companies that have financed any of the debt on the business.
What are the opportunities for growth?
You need to make sure there is room for expansion in order to make a profit on this investment.
What are the plans for expansion?
Businesses that plan to grow and expand will be more attractive to you than those not planning on growing.
What is your marketing plan?
You will want to find out how they plan on targeting the customers.
Are there any pending lawsuits or pending tax issues related to the business?
If there are a lawsuit or penalties or tax issues, you should ask if there plans to pay those costs. There may be a policy of passing these costs on to customers.
What outside services does the business use?
You should ask about utilities, cleaning, internet, etc. You will probably continue these services on your own. If you need to change providers, check how much time and money will be involved in making those changes.
How much money is being spent on advertising?
Businesses often have marketing budgets. You should ask if there is any form of marketing or advertising plan for your business.
Are there any plans to expand or relocate the business?
If there are no plans to change the business’s physical location, you will probably continue to take your orders in the same space.
If there is a plan to expand or relocate, you will need to figure out how much time and money it will take before your business can grow in the new location.
What plan does the owner have for the business in the future?
The business owner should be able to show evidence that the business is viable and has a plan for success.
What is the down payment requirement?
The down payment requirement varies depending on market conditions, the type of loan, and whether or not the business owner is willing to work with the lender to negotiate terms.
What are the monthly payments?
Your monthly payments will really depend on your personal situation. This will include your income, the type of business, and the amount of debt you have.
Can the business owner provide exit strategies if the business is not making money?
It may be impossible to exit an unprofitable business. If the data shows there is a plan to improve profitability in an undetermined time frame, you will need to ask extra questions about that plan.
Is there is a lease on the business location?
Most businesses are located in rented spaces. This means the owner of the business will never have full ownership of the physical location.
What are the long-term plans for this business?
You should ask questions about how much time and money the current owners plan to put into growing their company. You will want to know if they really plan to sell or if they plan to continue working in the industry.
How is the equipment being used?
Ask about the system being used for inventory tracking and shop floor management.
How much personal liability is there?
Check to see if a corporate shell protects the business.
Who else has looked at this business?
You should ask how many other people have looked at buying this business. You will want to ask if they have any references that they can provide.
How much cash is available to the owner?
You should ask about the amount of cash that is available to the business. You will want to know if they have any money they can put into the business or if they have enough for their personal needs.
How do you ensure that there is a steady supply of qualified employees going forward?
The business owner should be able to show evidence that you will have a steady supply of qualified employees going forward. If there is a plan to increase the profit of the company, you should also make sure that you have a plan for qualified employees to handle growth.
Are there any conflicts of interest?
Find out if the business owner will continue working in their industry.
How much debt does the company have?
You can ask about all debt on the business. You should also ask for information on debt that other companies have financed.
How much is personal debt being financed by the business?
You should check all debt that is financed by the business.
Does the business have any assets?
There may be assets that can be sold to help pay off debt or finance your investment. You should ask if the owners of the business are willing to sell these assets to help reduce your risk.
What are your annual financial statements?
Businesses should be able to show you their profit and loss statement, balance sheet, and income statement. You should also ask for a detailed list of all expenses.
How long have you owned the business?
You should ask what the owner has done to make the business successful. You will want to find out if they started the business on their own or got some help from others to start up the company.
How is the business customer base and loyalty?
You should ask what the customer base looks like and how loyal they are. You will want to make sure that you will be able to grow the business after you purchase it.
What is your exit strategy?
It should be clear how long the business owner intends on working in this capacity. You should find out if there are plans to sell, retire, or transition to a new position within the company.
Is the business financially stable?
You should make sure that the company is financially stable. You should also find out if the business has enough cash on hand to run the business.
What is your product or service?
You should be able to tell what product or service you are purchasing.
How do you keep your employees loyal?
It is important for you to know how to keep your employees loyal.
What are your employee benefits?
You should ask about medical, dental, vision, and insurance. You should also ask about their retirement package.
Are there any pending lawsuits against this business?
You should ask if there are any legal issues that you have to worry about during the time you own this business. It is important that you perform due diligence before buying any small business for sale because if it’s not properly evaluated, you can lose your investment completely.