Where to Find a Small Business for Sale

Break out your Sherlock Holmes cap and magnifying glass because finding a good business to buy is a lot more like doing detective work than shopping at the mall. Be prepared to turn over a lot of stones and follow a lot of tracks, many of which will lead to dead ends. 

But perseverance pays off, and this article covers some proven resources for generating leads in your search for the right business to buy.

How to find a small business for sale

What are the best places to find small businesses for sale? Generally, you won’t just stumble upon an established business for sale – you’ll have to look around. Check out these ways to start your search.

1. Perusing publications

If you focus on specific industry sectors, you may be surprised to discover how many specialty newsletters and magazines are out there. Just think of the fun you can have reading publications like Piano Technicians Journal and Diaper Delivery Service Business Guide! Specialty publications and associated websites get you into the thick of an industry and also contain ads for businesses for sale or business brokers who work in the industry.

A useful reference publication that you can find in public libraries is the Small Business Sourcebook (Gale). This enormous reference contains listings of publications, trade associations, and other information sources by industry. 

Also peruse the classified ads in leading business publications, such as The Wall Street Journal, where owners wanting to sell small businesses can buy ads in the full-run or regional editions of the newspaper.

Conducting literature searches of general-interest business publications helps you identify articles that can keep you up-to-date on your industry of interest. You can use online computer searches to find the most useful articles.

2. Networking with advisors

Speak with accountants, attorneys, bankers, financial advisors, Chamber of Commerce employees, and business consultants who specialize in working with small businesses. These advisors sometimes are the first to find out about a small-business owner’s desire to sell. Advisors can also suggest good businesses that aren’t for sale but whose owners may consider selling in the future.

Make the effort to get to know and interact with these people personally. Set up a time for a phone call and/or an in-person meeting. Relationships and trust are built through live interactions, not texting and emails.

3. Knocking on doors

If you were a homeowner and someone came to your door and said she was interested in buying your home, you’d probably say that you’re not interested in selling. If the interested buyer said she really liked the type of property you had and was willing to pay what you consider to be a good price, the person may get a little more of your attention, but you’d still likely turn her away. But if you, as the homeowner, were considering selling anyway, you’d be all ears — especially if you think you can sell directly and save paying a broker’s selling commission.

Some business owners who haven’t listed their businesses for sale are right now thinking about selling. So if you approach enough businesses that interest you, you may find some of these not-yet-on-the-market businesses. (Who knows, the business owner you approach may not be interested but may know another business owner who is.) 

The reason to go to this trouble is that you increase the possibility of finding the right business. You may also get a good deal on such a business. You can negotiate with the seller from the beneficial position of not having to compete with other potential buyers.

Instead of calling on the phone or knocking on the business’s door, start by sending a concise letter of introduction that explains what kind of business you’re seeking and what buyer qualifications you possess. This step demonstrates that you’re investing some time in the endeavor. Follow up by phone a week or so after you send the letter.

4. Enlisting business brokers

Some sellers list their businesses for sale with business brokers (also known as intermediaries). Just as a real estate agent makes a living by selling real estate, a business broker earns his livelihood by selling businesses. Business brokers provide a number of services:

  • Establish a confidential selling process
  • Maintain an inventory of businesses for sale
  • Assist in determining a fair market value of a business
  • Work with potential buyers
  • Help clients negotiate and structure their offers
  • Assist through the close of the transaction

You’d hire a business broker for similar reasons that you’d hire a real estate broker:

  • Technical expertise: Business brokers understand the process. They also understand the pros and cons of most businesses because they’ve seen a number of similar businesses throughout their career. The trick here is to find an experienced broker you can trust. When you’ve done that, the broker can take a lot of mystery out of the process and a lot of risk out of the purchase.
  • Emotional noninvolvement: The broker serves as a middleman between the buyer and seller. As everyone who has ever bought or sold a business knows, the process can get quite emotional.
  • An ability to see the deal from both sides: You can bet you and the seller will have differing points of view!

Of course, working with business brokers isn’t problem-free. Here are some of the main issues you may face if you decide to go the broker route:

  • Commission conflicts: Brokers aren’t business advisors; they’re commissioned salespeople. That fact doesn’t make them corrupt or dishonest, but it does mean that their interests aren’t always in line with yours. Their incentive is to do a deal and do the deal soon — and the more you pay, the more they make. Business brokers typically get paid 8 to 10 percent of the sales price of the business. Technically, the seller pays this fee, but as with real estate brokers, the buyer effectively pays, too, because the seller builds the commission into the price.
  • Undesirable businesses: Problem and marginal businesses are everywhere, but a fair number of them end up with brokers. The reason: The owners had trouble selling them on their own.
  • Deceiving packaging: This problem relates to the previous two potential pitfalls. Brokers help not-so-hot businesses look better than they really are. This typically involves stretching the truth — that is, omitting the negatives and hyping the positives. (Yes, owners selling their business themselves may do these things as well, but not as “effectively.”)

Business brokers generally sell smaller small businesses — those with less than $1 million in sales annually. These businesses tend to be family owned or sole proprietorships and include restaurants, dry cleaners, other retailers, service firms, and small manufacturers and wholesalers. Approximately half of such small businesses are sold through brokers.

Most business brokerage firms sell different types of businesses. Some firms, however, specialize in only one industry or a few industries. If you don’t have your heart set on buying a particular type of business — a computer repair business, for example — one advantage of working with brokers is that they can expose you to other businesses you may not have considered. 

Brokers can also share their knowledge about some of your ideas — like the fact that, if you buy a computer repair business, you’ll need to work on the weekends to fix your best customers’ computers so that they’re ready for Monday. Still want to buy one?

So how do you find potential business brokers? Ask tax, legal, and business consultants for good brokers they know. Also check out ads for businesses for sale; they may lead you to a broker. If you’ve found a broker you think you’d like to work with, check that the broker works full time at his profession and has solid experience. Some business brokers only dabble in the broker business part time and make their living other ways. These brokers may lack focus and experience.

5. Check small-business-for-sale websites

Small business listings are a good place to look for businesses for sale if you want to know how to find businesses for sale.

Businesses for sale and franchises can be found on websites such as bizbuysell.com, bizquest.com and franchisegator.com. Users can filter results by industry, location and price. If you’re not sure what type of business to buy or where to operate, you can use these sites to compare and contrast your options.

These sites can save you a lot of time if you know what type of business you want to buy and where to look. If you know exactly what you’re looking for, you’ll waste less time sifting through companies you’ve already ruled out.

You can usually set up notifications when businesses that match your criteria are listed for sale, so you can stay on top of your search. You’ll also see images and details about each business you’re considering, so you can see online if the business is a good fit for you – and not waste your time visiting businesses that aren’t a good fit for you.

If you’re looking for an established business for sale online, consider Bizbuysell.com. With over 100,000 businesses for sale, you’re sure to find the right one. In addition to business listings, bizbuysell.com has a long list of affiliated business brokers and tools to find local brokers.

Once you have found the perfect business for sale, follow these steps:

You’ve been researching a few small businesses for sale and have found the perfect one for you. You have made it past the first steps, but there is still a lot to do before you can call it yours.

Gather all the information you need before moving forward

The business has already been vetted when you were deciding whether to purchase it, but now you’ll have to work with a banker, accountant, and lawyer to get all the information you need.

You will need many documents, but these are the essentials:

  • Letter of intent.
  • Confidentiality agreement.
  • Business financial statements.
  • Contracts and leases.
  • Sales agreements.
  • Status of inventory, equipment, machinery and building.

These documents are crucial when you’re buying a business. Before committing to a purchase, you should get all this information in writing. You’ve already looked into the small business for sale.

Assess the business’ price

There are various ways of assessing the value of an existing company, e.g. on the basis of cash flow, tangible assets or intangible assets.

Regardless of which method you choose to use for pricing, you should consider both the current financial position and the growth potential you’re paying for. To get a feel for this, take a look at the company’s balance sheet, cash flow projections, tax returns and income statements to get a full picture of what you’re paying for.

You’ll also need help negotiating the price of the business – because not every price is set in stone. This is a good time to ask your business broker, attorney, banker and accountant for help.

And once you know what you need to put on the table to buy the small business for sale, figure out how to raise the money or take out a loan to buy the business. There are several ways to raise the capital needed to buy the business, including partnering with others, selling stock, leasing, business purchase loans, etc.

Close the deal

What was your last step? Closing the deal.

To accomplish this, you’ll need a lot of legal documents, notes, and agreements – such as the bill of sale, adjusted purchase price, patents, trademarks, non-compete agreements, and more.

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