Want To Buy A Business With No Money [UPDATED]
The most popular methods to buy a business with no money of your own are SBA loan and Seller financing. There are more ways such as getting an equipment loan, depending on the type of business you are buying.
want to buy a business with no money
As discussed a bit at the beginning, there are multiple ways of closing a deal with no money of your own. Seller financing is the most popular method, where the seller allows you to pay off the business price over time.
Now say you got an SBA loan of 70% of the purchase price, how do you pay the rest? Own money? Absolutely not! You take an equipment loan to cover the rest. In most cases, SBA + Equipment loans together leave some good money on your hand even after paying the purchase price, which you can use to develop the business when you start.
You can also cobble together various methods to buy a business without paying any cash upfront. For example, you can use income-generating business assets to pay off the seller quickly. In addition, you could bring in a few additional silent partners to help you acquire the business and then buy them out later.
One thing to note is that most venture capitalists only invest in businesses with an existing plan. So, if you plan to use this approach, remember that you will need to sell the business or buy out the investor at some point.
The key to buying an existing business without money is to be able to get the deal done. Your ability to make a good no-money deal highly depends on your ability to sell yourself to the right person, the right way, and persuasively.
The past couple of years has seen the rise of Amazon FBA aggregators, which are investment-backed groups tasked with acquiring and operating Amazon FBA businesses. While highly lucrative if done right, this type of operation is often far more complex than funding a single business and requires teams of specialists to manage a portfolio of businesses.
Business model: Running an ecommerce business and running a website are two very different experiences. One involves managing inventory and logistics, and the other might involve creating content or managing content creation specialists. You need to decide what type of business model you would like as well as your specific role within it. Do you plan to have a largely hands-on role, for example, creating content or responding to customers? Or do you plan to manage a team of specialists?
State of the business: Is this business experiencing a period of high growth or decline? This decision will likely depend on your level of experience with online businesses and your confidence in being able to restore a failing business or grow an already optimized one.
Buying a business, even with financing, is a major undertaking. As stressed above, we recommend speaking with an accountant or financial professional before committing to financing. We also recommend discussing financing an online business purchase with a qualified third party, such as a sales advisor.
Born and raised in Northern California, Nick spent a majority of his former years in a small country town, with a desire to eventually venture out into the global expanse. After university, what began as a year-long trip to Seoul to learn more about his Korean side, turned into an almost decade-long stay in Asia. After many years in online business, Nick joined Empire Flippers in 2019 to help his kindred spirits on the marketplace transition their own businesses. A fan of the simple things in life (pizza with only pepperoni, nothing else), when not in front of a computer, you will likely find Nick either at the gym hanging on a pair of gymnastics rings or stuffing his face with food in his neighborhood.
There are a lot of people out there who would like to be business owners, but there is one small problem that is keeping them from pursuing their dream: lack of available capital. The assumption is that without a large bank account, it is impossible to purchase an existing business.
You will likely need to find a seller who is willing to finance at least a portion of your purchase (more on this later), and you will need to find other alternative forms of financing. You also need to demonstrate the ability to operate the business successfully, which brings us to our next point: should you try to purchase a business with no money down?
Going into business is very risky, and most new businesses fail within their first five years. Therefore, purchasing an established business that has already stood the test of time is usually a better strategy.
Assuming you have determined that you have the necessary skills and experience to be a successful entrepreneur, here are some ways you can purchase an existing business without any money out of your own pocket:
The first key step to finding a business that you can buy with no money down is to identify businesses whose owners really want (or better yet need) to sell. Signs of a motivated seller may be owners who are close to retirement age, owners who are dealing with health challenges or health issues of a close family member, or businesses that have been for sale for several months with no buyers. An owner who is ready to get out is far more likely to entertain the idea of seller financing.
If you can find a business that is barely turning a profit or maybe losing money but could be turned around with better management and the right solutions, there is a much better chance that the owner would sell to you with little to no money down. Just be certain that you can turn the business around, because if you are not confident of this, then you could be getting yourself into a very difficult situation.
If you are dealing with an owner who does not want to do 100% seller financing, one way to change their mind could be to offer them a higher interest rate than what the going rate is at the time. Along with a higher rate, you can structure the deal so that they receive a higher payment from you, which means that in the long run, they are able to cash out for more than the expected sale price.
You could also get a little more creative with this strategy and ask the seller if they want to retain an ownership stake and become a silent partner. This might be an appealing option for some owners who do not want to work anymore but still want to enjoy some of the fruits of the business that they have worked so hard to build.
If all else fails, you can always try to raise the capital you need to purchase the business through crowdfunding. With crowdfunding, you can bypass financial institutions and raise money directly from the public. This could be done through equity crowdfunding, where public investors receive equity in your business in exchange for their funds, or through debt crowdfunding, where investors put up the capital for a business loan that you repay to them with interest.
Speak with a reputable CPA and accounting practice broker in your area. Business brokers help potential business buyers prepare for purchase, and they work closely with owners throughout each phase of the sales process to help ensure a smooth and successful transaction.
Many smart entrepreneurs prefer to buy an existing business instead of beginning a new one. Buying a business that is already operational will bring many benefits, including an already established product or service, well trained staff who know the business and enough success to have kept the company afloat for a period of time. Not having enough cash on hand to purchase the business will not necessarily keep you from buying it. Banks have been tightening their commercial lending standards in the last few years, but you can still find the funding necessary to purchase a business without using your own money.
Buying a business with no money down is one of the hardest ways to acquire a business. However, it is possible to buy a business with no (or little) money down under the right circumstances. In this article, we examine:
Getting a no-money-down transaction is usually very difficult. Successful transactions of this type tend to be few and far between. However, there are ways to finance a business acquisition with no money down, including the following:
One reason an owner may want to offer 100% financing is if the business has problems. Basically, they want to unload it as quickly as possible to whoever wants to buy it. Offering aggressive financing is one (or the only) way to attract buyers.
Plenty of entrepreneurs have the urge to run their own business but not necessarily by starting one of their own from scratch. Buying a business makes sense for several reasons, with advantages including that existing businesses have established customers, current sales and ongoing cash flow. These advantages come at a price, namely, the value of the business. Most owners, even if they offer seller financing, will still expect a down payment for the business before they hand over operations to you.
Thus, to try and buy a business with no money down is a pretty tall order. Despite this, with some luck, determination and clever strategy, you can find an owner that may work with you to buy the business with no money down and payments spread out over time. It is not impossible, but frankly, very difficult. Read on to find out how to buy a business with no money.
For more on buying a business in general, check out this complete guide to buying a business. It covers all the aforementioned steps in great detail as well as information on the forms, permits and paperwork you might need. When it comes to buying a business with no money, here are some good strategies you can take.
This is the key first step: You need to find business owners who really want or need to get out; perhaps even desperate to get out. Research is the best way to do this, such as investigating local businesses, their owners, conditions of their business, their industry and their market. At this stage, enlisting the help of a business broker would make this step easier since their job is to aid in the buying and selling of businesses. 041b061a72