For some of us, the next right fit role or company just may not surface.
So maybe this is a time for you to consider small business ownership and being your own boss. Rather than look at this as a last resort, it may just be the perfect option to apply all those skills you have honed over the years and apply them for yourself!
One valuable source for searching existing small businesses for sale in your area is www.bizbuysell.com.
You can also contact local commercial brokers at real estate offices.
You should understand why the owner is selling? is the business profitable? if so, why would owner sell? You just may find the Baby Boomer owners are tiring out or retiring and ready to pass their businesses on, but their Millenial or Gen Y offspring are not in line to take over.
Financing Your New Business:
- Determine your assets you have to use to buy your business – home equity lines of credit, savings, other investments you can cash out.
- Apply for a Small Business Administration (SBA) Loan – they may require prior relevant business experience.
- Consider researching usage of your 401K Plan without penalty – Rollovers as Business Start-Ups (ROBS) are arrangements in which current or prospective business owners use their 401(k), IRA or other retirement funds to pay for new business start-up costs, for business acquisition costs or to refinance an existing business.
- Prepare a full business plan with discipline so you can assure your investment will be profitable and will produce the cash flow.
- Watch out for brokers who require you to give them $ for receiving details on businesses – even at $10.
- Is there a business that you see that triggers some enthusiasm for you?
- Do your research methodically as corporate world trained you – category strength, financials, competitive analysis, operational efficiencies, etc.
- Brokers will supply fact sheets after you sign an NDA and prove you are a viable buyer via some financial information – some are very detailed, others vague – ask for the data that you need.
- Visit the business every day at different times of day.
- Once you are serious about making an offer, you will be entitled to verify the business financials & traffic by spending 2 weeks in the establishment with the owner before closing.
Reasons Why Buying A Franchise vs. Buying An Existing Business?
- Business in a Box – there is a packaged business with proven financials from other experienced franchisees.
- Part of a Network – you are not all alone in getting started. Some franchisees offer group calls and meetings to create a group culture, others do not.
- Financial Loans/SBA – the banks like franchise businesses with proven track record especially if you do not have industry experience.
- Support in formulating sound Business Plan – other franchisees will help you substantiate your financial assumptions and help you understand pit falls to watch out for in creating your financials.
- Brand name, support materials & training – you do pay royalties and a initial fee that can range from $5K-50K upfront. Analyzing the benefits you are given for the fees beyond the set up support such as marketing materials, data analysis and suggestions, website, social media, brand building marketing efforts, etc.
Contact us for useful template for analyzing your small business or franchise.