STEP 1
If buying a business is your goal or dream, treat it as such. The first step is mainly about courage. Have the courage to “click for more details” on a listing or post. Have the courage to talk to a business advisor. A lot of people interested in entrepreneurship loathe the idea of talking to someone about it. Is it because they suddenly feel that it’s too real? Are they afraid of appearing uneducated about the process? Is there a hang-up with giving too much information? Whatever it is, it can feel dangerous. There is no danger or risk associated with getting more information – there’s no cost involved. Meeting with a business advisor will simply layout the steps in the entire buying process so you know what needs to happen and when. Find the courage to pursue your dream.
STEP 2
Step two is all about removing the fear and trepidation of buying a business. It’s safe to tell a business advisor your dream, and in return you’ll learn about the world of buying a business. Key elements in this step are learning why your financial data is required in the process – to know the parameters in which to narrow your search. We don’t want to waste your time with a business sale you cannot afford. That doesn’t make sense for anyone. We’ll review sources of capital if you need resources to finance your purchase, and explain what it means to sign an NDA (non-disclosure agreement), and how it protects both the buyer and seller.
STEP 3
Here’s where your personal life goals are called upon. A business advisor will offer practicality to this step by assessing your capabilities, skills, experience, and financial detail. Think of it as dreaming big while dreaming smart. Your business history, your industry experience, your soft skill management, your natural proficiencies, and what goals you have for your future will be shared and discussed. We’ll evaluate geographical parameters. Oftentimes this step is where your horizons will broaden when you think of business ownership. An opportunity you never even considered might be evaluated, for example, giving you all kinds of options for your dream.
STEP 4
A lot of people think they can handle the business search step themselves. However, a business advisor has a network and specialized access to many different listings an individual doesn’t. And if our search through our listings doesn’t yield a suitable business for sale in your eyes, we collaborate or co-broker with another firm or brokerage to find one that meets your criteria or goal. It’s common that when someone comes to us with a listing in mind they don’t usually end up buying that particular business. Yes, they become business owners through the process but not of the original listing they were interested in - it could vary in industry, size, or even geographical location. That’s why the search step is so important.
STEP 5
Buying a business is a decision, and many decisions are highly emotional. The offer stage of buying a business is both a big decision and emotional. The first consideration is the acceptance parameters – meaning, setting a threshold financially for the offer itself and assessing the risk associated. This removes emotion and makes the decision logical. It’s important to adhere to the parameters, and an advisor will assist in establishing that, but the buyer is always driving the ship, so to speak. This step involves earnest money – or a percentage of the sale – that your advisor will put into escrow. Then, the seller will accept, decline, or make a counter offer to your purchasing offer. From there, it comes back to you and a business advisor will help consider your options, and add structure to the offer and all its complexities.
STEP 6
The period where the work begins! No matter who signs the offer after it’s been back and forth between the you and the seller, there’s a 10-day period of time buyers can give written notice to halt or stop the sale. The 10 days is where due diligence is conducted, or ensuring all the elements of the business are assessed and acceptable terms for purchase. The seller will spend this time contacting landlords, and managing real estate or lease transfers. All applicable licenses, permits, key employee negotiations, and transitions happen. Your CPA or accountant and attorneys ensure there are no red flags when the business’ books are reviewed. There is a lot of back and forth but it’s necessary to conclude a good business transaction is occurring for both parties.
STEP 7
A closing agent or attorney will facilitate the transfer of ownership. The buyer has a final chance to inspect the business the morning of the closing date to ensure everything has remained as contracted through the offer and due diligence. There shouldn’t be any surprises at this point in the process due to the effort a business advisor has conducted with both the seller and buyer for continuity and communication. A substantial amount of paperwork will be signed and documented, the buyer and seller shake hands, transfer keys, and everyone walks away happy – in a perfect world. The closing step is symbolic as it closes the process and all the waiting, wondering, and worrying that accompanies such a large, important undertaking such as buying a business.
STEP 8
Yes, there is a final step in the buying process with a business advisor. In most cases, the seller has agreed to a few things that impact the transition post-closing. One is agreeing to terms regarding radius and competition – meaning refraining from opening a competing business or service within set parameters, and the other regards training and support for the buyer’s transition to ownership. There is a lot of knowledge to transfer as ownership exchanges hands, and the seller might agree to a transition period and/or compensation to oversee it. It’s up to the buyer to accept any of those terms after the sale has closed.
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