5 Ways to Determine the Right Type of Business to Buy | Manta

By The BizBuySell Team - July 6, 2016

If you’re considering buying a small business, there’s no better time than the present. As the economy continues to grow and businesses are becoming financially healthier, many Baby Boomers are deciding to cash out and head for retirement. In the first quarter of 2016, BizBuySell reported the number of small businesses listed for sale reached their highest level in seven years.

At the same time, buying a business is a big decision and you may be overwhelmed by all the choices available to you. Before you make the commitment in purchasing a business, it’s wise to gain a clear understanding of what type of business is truly right for you.

Here are five ways to determine the right type of business to buy:

1. Explore your personal interests and lifestyle. Are you a sports fan? Do you love animals? This is a good time to assess the things that you truly enjoy. If you’re a fitness fanatic, then you might consider owning a health club or a yoga studio. If you enjoy gardening, then you might consider a landscape business or nursery. As a small business owner, you’ll be immersed in your business for extended periods of time, so it’s important to choose something that you find interesting. Better yet, choose something you’re passionate about.
2. Consider your skills and talents. This is a very important factor when it comes to buying a business. You should have some sort of professional experience or knowledge of the industry. If you’ve never worked in the food service industry before, you may not have the experience to be a successful restaurant owner. Yet, if you have a strong passion for a certain type of business or industry, then it would be wise to get some experience first. If you love gourmet food, then consider getting a part-time job in a restaurant or catering company to first get your feet wet.
3. Assess your financial position. Depending on the type of business you choose, you will have to invest some amount of capital. Some businesses, such as financial consulting that can be operated out of your home, may require as little as $10,000. On the other hand, a manufacturing or retail business, which may include equipment and inventory, may require $50,000 to $200,000. There are several creative ways in which you can finance the purchase of a business. You can check with your local SBA office to learn more about the types of small business financing available or visit BizBuySell’s Finance Center for other funding options.
4. Do your research. Before you get swept away in the fun and excitement of owning your favorite neighborhood bicycle shop, check some facts and figures. Is there a built-in demand for the product or service? Is it a high-margin item whereas you can expand and grow the business? What is the short- and long-term potential of the product or service? Is the industry growing? Additionally, consider your local geographic area and determine whether or not there is room for you to compete and grow.
5. Think of the future. Taking over an established business is more than just keeping the doors open. Managing a business plays such an important role in its success or failure. Consider what you will do to change or improve the business after you buy it. Think of its upside potential, what you can do to add value, diversify and grow it into something better than it is now. Get started by developing a preliminary business plan for the next six months, and then for the next two years.

Now that you’ve decided the type of business you want to buy, you’re ready to begin your search. An easy way to get started is by going online to a business-for-sale marketplace and view businesses listed for sale. You can narrow your search by business category, location or asking price. If there’s already a particular business that you have your eye on, consider making the owner an offer. You might be surprised at how many business owners are willing to negotiate the sale of their business.

Another way to buy a business is to hire a professional broker. Not only can they do the leg work in helping you find the right business, they can be invaluable throughout the entire sales process. Once you find a business that you’d like to make an offer on, an experienced broker can help you with pricing, financing, and ensure the entire transaction goes smoothly. An online business broker directory is one of the easiest ways to locate business brokers in your area.

There is much more to learn about buying a business, such as knowing what questions to ask the seller, negotiating the terms of the deal, and preparing for due diligence. For a more detailed overview of the entire business buying process, you can download BizBuySell’s free Guide to Buying a Small Business.

BizBuySell is the internet’s largest business-for-sale marketplace, offering tools and resources to assist business owners and brokers to sell a business, as well as potential buyers to find the business of their dreams.

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For additional information regarding Florida business sales, acquisitions and valuations, please contact Eric J. Gall at Eric@EdisonAvenue.com or 239.738.6227. Also, visit our Edison Avenue website at www.EdisonAvenue.com or my personal website at www.BuySellFLbiz.com.