So, you have decided that you want to buy a business. This is an exciting time in your career but can also be stressful, daunting and overwhelming. These feelings, and any combination of them, is completely normal. Some potential business buyers already have funds to buy business and those funds can come from many different sources such as an inheritance, stock market earnings, a line of credit, a loan, a trust fund, or additional prior savings. For many people, however, the decision to buy a business may come when the buyer does not necessarily have all the funds to do so readily available. If this sounds like you, the below tips will help get your finances in order as you look into buying your new business.
- Consider working with a business broker: It is true that a business broker will charge you fees for their services, and that might seem counterintuitive to saving money and managing finances before making a big purchase, but that is not the case. In fact, a business broker will save you money in the long run because they will ensure you get a business at the best price. In addition, they do a lot of the middle man work that would eat up time and money for you to do without experience.
- Pay off your high interest debt- If you are still paying off other loans like student loans, bank loans or credit cards, examine which ones have the highest interest rates and work to pay them off. This will free up some of your monthly budget so you can have a bit of extra money for business related expenses.
- Enlist friends and family- If you have family and friends that will help you do prep work for free, this will save you a considerable amount of money. This could include doing repairs once you have found a business, doing research and making appropriate calls.
- Take a break on eating out- Except for special occasions, save some extra money by eating at home. If you have business partners or family involved, you can even host potlucks or group dinners so you can all share in the preparation and then use the time to have a meeting about your business.
- Talk to someone who has sold their business- If you know someone who has advice on selling business, it can help you understand what sellers want, making you a better candidate as a buyer. This way, you are more likely to narrow in on the types of businesses that would be a good fit for you as well as how you should interact with the sellers and business brokers. They also might be able to tell you what questions to ask that would show a seller that a potential buyer is appropriately invested in the business and would be a good fit.
Buying a business can be a financial strain, but with a little attention paid in the months leading up to the purchase,you can ensure you are in a better financial position and a better emotional position as well.