This article are provided for information purposes only, and are not intended as legal advice.


Are you impatient trying to buy a business?

March 25th, 2009

Most people when they decide to buy a business, they want it now.  When you decide to buy a house, there are lots of them around, you look for what you can afford, find the neighbourhood and put in an offer to buy.  Unfortunately, there are more houses for sale then there are businesses for sale.  In a subdivision, you can have a range of houses but often two houses side by side could have similar prices if they are the same size.  The physical size of a business has nothing to do with the price, it all relates to profitability.  For example, a fast food restaurant which occupies 2,000 square feet could have sales of $1 to $2 million.  A coffee shop in the same size facility beside it may only have revenue of $500,000 to $1 million.   If they are both for sale, they could have significantly different prices. 

 

When you make the decision to buy a business, you made your decision and now you want it to happen immediately.  Even if you found a business on your first day that you are looking, it will still take 4 to 8 weeks to close the transaction.  First you come up with the letter of intent, then you go through due diligence then the lawyers create the purchase and sale agreement.  Each step takes time, from a few days to a week or two.  Add them all up and you are looking at 4 to 8 weeks after you found your dream business.

 

There is no central listing of businesses for sale.    When you buy a house, you hire a real estate agent to look for houses for sale on MLS.   Since there is no MLS listings for businesses, you can hire a business broker but many people do not want to pay a broker to find you a business.  Many business brokers do not share the businesses that they sell with other firms.  Finding a business is work and you must be continually on the search for a business. 

 

There are three approaches you need to do:

look on The Business Place for a directory of businesses for sale

sometimes owners of businesses are sitting on the fence and are debating to sell their business.  If they see an investor list with people looking to buy his type of business, he will want to contact you.  If you are looking to buy a business, you need to register as an investor on The Business Place.  Investors do not want to publicize who they are therefore do not put any indication of who you are in the description of what you are looking for.  The website is anonymous and if a buyer wants to contact you, we will send you an email saying that there is a message in your inbox.  If you are interested, you can identify yourself to the buyer. We do not do that for you.

 

Talk to as many brokers are possible. Each broker has different businesses for sale.  Find out what is available.  if you wait for the perfect business to fall in your lap, it will not happen.  You have to be continually on the search for a business. 

 

Be prepared, it takes on average 6 to 12 months to find and close on your business for sale.


Filed under: Buy a business — Gary Landa @ 10:36 am


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