Buying an Established Business: The Choices

Buying an Established Business: The Choices

Thinking about starting a new business can be overwhelming. Starting your own business involves developing an idea and turning that idea into a successful business plan and then actually building the business from the ground up. Not to mention forming a customer base over an extended startup phase, marketing the new business, hiring employees and establishing cash flow. All without a track record or reputation to back you up.

But starting a business does not have to a daunting process. Because there is always the option to buy an established business! Starting a new business through an established franchise system or buying an existing business is a much easier process. At the end of the day, you will still own your own business and get to enjoy the freedoms involved. But this route will begin without the headache of building a business from scratch.

Generally speaking, when buying an existing business it comes with an established customer base, cash flow, and employees to help with the day-to-day activities. The existing business already has procedures, systems, and policies in place so you don't need to build the system yourself. If you choose the franchise route, the same benefits apply. You will get an established reputation, a track record, policies and procedures in place, and a support system to help you through the start-up phase and beyond. An added benefit is that it is much easier to acquire financing for a business through a franchise company versus a new business you yourself must establish.

Now that you've chosen to buy a business (or buy into a franchise) you need to identify the characteristics of a business that would suit you best. Important factors to consider are as follows:

  • What industries do you have an interest in?
  • What industries do you have background experience with? This is less of a factor with a franchise as the franchisor provides a certain level of training.
  • Does the business meet your lifestyle needs and goals?
  • Is the business location beneficial to its success and a reasonable distance for you to travel?
  • Is the business a manageable size for you to operate?
  • Do you want to manage a large staff, a small staff or no staff?
  • How much time can you commit to the business or would you prefer to have a manager in place?
  • Will you be able to scale the business if you have growth plans for the future?

Finally, the most important consideration is how much cash you are able to invest in a business. This will help establish a purchase price range that is within your budget. There are several ways to finance a business: cash, cash plus a bank loan (using personal equity), cash and some amount of seller carry, or a combination of cash, lenders, and owner carry. A business broker will help you analyze your personal financial situation and establish a transaction structure that will be beneficial to you and the seller.

Working with a business broker will support you while you navigate the business buying process as they can point you toward a business that will suit your needs and lifestyle preferences. A business broker will bring business opportunities to you that meet your criteria for cash flow, industry, price range, and location. They will guide you through the process of negotiation and financing and most importantly they will coordinate with the seller on your behalf. Essentially the process will be greatly simplified by working through a business broker.

Buying a business, whether it be an existing or a franchised business, is a journey. The journey begins with the decision to change your life and choosing a broker to represent you and ends with the reward of working for yourself!

To see our current business listings for sale please visit our website or schedule a free consultation today to discuss your business purchase requirements!

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Rachael Holstein joined the Transworld Team in 2016 as Marketing Coordinator. Her working experience has been largely focused on Business Development and Marketing in the finance, architecture, property management, and information technology industries. A longtime resident of Cleveland, Ohio, she attained her Undergrad from John Carroll University and a Master's Degree in Global Interactions from Cleveland State University. She relocated to Denver in 2013 for a change of scenery and a bit of adventure.