4 tips for buying a business

Ready to buy a business? Do not propose until you carefully follow these rules.
1. Answer the question: "Why do I want to buy this business?"
When I bought MyCorporation in 2009, I was the CEO of its division at Intuit. I was familiar with the inner workings of this business. I believed in her offers and clients and was confident that I could manage the business and grow it as a CEO.

Buying a business is a big investment. Why do you want to buy an existing business? Don't answer by saying that you are doing this for financial reasons or to become a boss. Take time to consider the answers to these questions.

Is this a business in an industry in which I have experience? Entrepreneurs don't need to know every detail about the business they want to acquire. However, it helps to have some understanding of your industry. Otherwise, you will spend most of your time trying to catch up.
What benefit will I get from the purchase? Does the business already have a proven concept? Strong income? Loyal customers? Is the business and its offers in demand?
Why is the business for sale? This is a conversation you can have with his seller. You can discuss how long the company has been in business, what is the current management and what is the revenue over time. Don't be afraid to ask why the business is for sale. The reasons may be different. If the answer you get sounds suspicious, start doing due diligence. (More on this a little later.)
What do I need to work in this business? Will you need to hire more employees? Rent a new office? Permissions for specific files to keep working?
Am I involved in this? You want to buy a business or learn something about its industry. However, the company will not grow under selfless leadership.
2. Do due diligence with the help of a lawyer and an accountant.
Buying a business to sell is still considered a risk, even if you're sure it's a good match.

Start doing due diligence on your business. Find out everything you can about the backstory of this company. It is recommended not to do this alone. Hire a lawyer and an accountant to help.

Accountants can help understand the financial position of a business, evaluate its financial statements for prior years, and determine the costs associated with acquiring it. Lawyers can help with the collection and drafting of key documents. Some of these may include tax returns, contracts and leases, a certificate of good standing, and a letter of intent, the latter of which is issued by the seller when a quotation is agreed upon by both parties.

3. Determine funding for the business
Generally, most entrepreneurs who buy a business require little additional capital. When I bought MyCorporation, I took out a second mortgage. I also started buying. This is a difficult way to finance a business because it requires a strict budget, but it can be done.

Beyond bootstrapping, consider other funding options. The US Small Business Administration (SBA) offers SBA-guaranteed loans ranging from $500 million to $5 million. Available from a wide range of lenders, these loans often come at rates and fees comparable to traditional bank loans. These loan programs have specific requirements, so before moving on, contact the lender you want to work with (using the SBA Lender Match tool).

Not ready to apply for a loan? There are other ways to finance the purchase of a business. You can use your existing personal savings, borrow money from your family, or buy a business using Startup Rollovers (ROBS) from qualifying retirement accounts.

4. Prepare a sales contract
Everything was moving towards this moment! It's time to close the deal with a sale and purchase agreement. Work closely with a lawyer to create this document and ask them to review the terms with you before signing the documents.

Once you've signed up, congratulations! The business has been sold to you and you are now the owner. This is an exciting time. There are great successes ahead, as well as some challenges. Do not worry. May passion, understanding and familiarity with the company and industry help you move forward in all aspects of leadership from now on.