Do you want to know how to buy a business with no money? Many experienced entrepreneurs prefer to buy an existing business instead of starting a new one. Buying an existing business will bring many benefits. An existing business is including established products or services. And trained employees who know the business and sufficient success will help to keep the company running for some time.
You may have no enough cash on your hand to buy a business, and it will not deter you from buying it. Banks are helping and supporting buying an existing business by following their business standards over the last few years. But instead of that facility, you have to find out other funds you may need to buy an existing business without using your own money.
10 ways read on how to buy a business with no money
Identify your ideal business.
Before you look to buy an existing business, consider what kind of business you want to run. If you plan to run the business for profit, you need to keep running the business for quite a good while. So make sure you actually want to involve yourself with the business you are going to buy. Also, determine what you need to help you to buy a business and identify it.
Find a business owner ready to go out.
Find out local businesses and their owners who are ready to sell. Usually, this means looking for a retired owner ready to launch a new business opportunity. Retiring owners will probably have a better chance, as they have more incentive to sell the business faster. These businesses are easier to own and try to identify in the following ways:
- Talk to lawyers or accountants who work in local businesses.
- Talk to business owners yourself. Even if they refuse to sell, they may find out about the other business owner.
- Read local publications and look for owners near retirement age.
Arrive at the right time
A good is to offer at the right time for any business to own. But that doesn’t mean it’s the right time for you, just for the business owner. As mentioned earlier, this can happen if the owner plans to retire. Periodically, it can be a time of economic downturn when the owner is looking for a quick exit to establish his financial security. While this is risky for you as a buyer, you can secure bet financing from the owner and then look for the business to grow rapidly as the recession goes out.
Find an Attorney
Buying an existing business without spending your own money, you need a good business attorney to make sure the contract is properly structured. Make sure you have an attorney who specializes in business sales, not a general-purpose attorney. A business agreement is manageable by an attorney who is having a better understanding of any business structure.
Find businesses that offer seller financing.
Some owners who are selling their business are willing to loan buyers to buy the business. However, keep in mind that almost no business owner is willing to pay 100% of the purchase price. You will still need a “down payment.” The down payment you can take from another source means you get the business without putting any of your money.
When a businessman is willing to lend you money to buy his business, it usually means two things:
- The business owner believes the business and in you
- The business owner believes that you can easily manage the business well.
But it can also mean a limited market for business; thus, fewer buyers know. As a result, sellers are exposing to substantial amounts of business liquidity.
Make a creative offer.
If the owner is reluctant to pay 100% financing, you may want to make an attractive offer in addition to their business purchase. This offer may take higher payments for a fixed period of time or better repayment interest rates. For example, a buyer may offer a job free of charge for several months to make good equity while paying the seller all the profits.
Find a business owner who wants to be a passive investor.
Some owners have been working on their own business for decades. They want to retire and enjoy life for a while, but they still need income. You can go to that type of owner with the opportunity to buy and run the business at a time when you can earn a percentage of the owner’s income.
In this situation, you may still need to put some money as an investment. However, you owe the owner one percent of what you are looking for several years to earn. This is similar to owner payments. Owner payments are based on the ongoing success of the business. You are not in debt either.
Find a secondary source of funding.
It is unlikely that any business owner will pay you 100% for the business. If so, you need a second source of funding. You can try going to a bank that is ready to provide you a loan. Getting a bank loan for a business is a long-run process. Bankers usually do not want to be part of any 100% financing agreement. In many cases, your best option would be to find a secured personal loan.
Bringing other investors
If you can’t afford to buy in any other way, you may bring additional partners to support you. This partner can contribute to the required amount of money in exchange for a share of the business’s future profits. You can even bring them up as “silent partners” where the business has no liability or active responsibility but contributes only money. Your equity partner will probably have to place its position under the original business owner.
Consider taking out additional loans.
If all your ways fail, you can think about additional loans to reduce working capital costs. A good way to do this is to take an inventory loan. Basically, an inventory loan pays the business to buy the goods for sale. The way is always keeping as collateral for the sale. However, due to the inconvenience banks may have experience selling seized goods as collateral, many lenders are reluctant to provide this type of money.
Periodically, if you purchase a business that earns a lot of money from credit card sales, then you would be eligible for merchant cash advances. This is a “loan” where you will receive a temporary amount of cash, but the company that provided you with this money takes a few percent of the time for your credit card sale.
FAQ: How To Buy A Business With No Money
How can I buy an already established business?
- Decide what you are looking for.
- Research available business.
- Consider working with a business broker.
- Do your best for the business.
- Acquire the necessary funds.
- Draft sales agreement.
What are the best businesses to start without money?
- Taking care of children at home.
- Dog care at home.
- Household appliances and goods.
- Dog training.
- Freelance writing.
- Freelance editing.
Do I really need money to start a business?
In most cases, entrepreneurs feel to make at least a small financial investment to start their business. There are many ways you would find to start a business with little money or no money. A business person is usually required to obtain a business license, for which a fee necessary to charge.
How much need to pay for a business?
Generally, 20 to 25 percent is considering to own an existing business. This means the buyer should pay $ 20,000 out of $ 100,000 for the business.
Is buying an existing business would be a good idea?
Buying an existing business is often more expensive than starting from scratch. However, financing to buy an existing business is often easier than starting a new business. Also, buying a business can give you valuable legal rights, such as patents or copyrights, which can prove very profitable.