How to Find a Business to Buy: Three Proven Methods

If you are looking to get into the world of online entrepreneurship, buying an established business can be a great entry point. It doesn’t come without risk, however. The first step in a successful acquisition is to find the right business to accomplish your specific goals. Knowing how to find a business to buy, as well as what to look for, can mean the difference between success and failure.

In this article, we discuss:

• Should you buy an established business or start a new one?
• Three ways to find an online business for sale
• Key considerations when buying an online business

Related Article: 10 Key Questions to Ask When Buying a Business

Should You Buy an Established Business or Start a New One?

Many entrepreneurs looking to get into the online business world ask themselves whether they should start a new business from scratch or buy an existing business. It’s an important decision to consider. In reality, there is no universal right or wrong decision.

Understanding the pros and cons of each option can help you make the right choice for your specific goals and needs. When it comes to buying a business, there are several key advantages and disadvantages to be aware of. These include:

• Less risk
• Established customer base
• The potential for high return on investment (ROI)
• Less time requirement
• Large up-front investment
• Less flexibility

Advantage 1: Less risk

As an entrepreneur, you know that owning and running a business entails risk. It’s unavoidable. When done correctly, however, buying a successful business can lower the risk of failure compared to starting an entirely new business.

Most new businesses fail. In the beginning, even the best business ideas or products are untested. Until you put your service or product on the market and get feedback from customers, you really don’t know how well it will be received—perhaps it takes off, but perhaps it fails.

When you buy an established business, the dynamics are different. The company has released products or services, and customers have demonstrated their interest. There is a proven product-market fit. While things could always go sideways, having a proven product-market fit lowers the risk of failure significantly.

Any time you invest a large amount of money you accept the risk that you could lose it. While buying an established online business may carry less risk of failure than starting a new one from scratch, the risk of failure is still very much present. In fact, compared to investing your money in index funds, buying a business is quite a bit more volatile. 

“As an entrepreneur, you know that owning and running a business entails risk.”

Advantage 2: Established customer base

For most new businesses, getting the first few sales can be tough. From there, building a sizable loyal customer base can be a long and demanding process.

When you buy a business, however, you have the luxury of choosing a company that has an established customer base. This shortcuts the time, energy, and uncertainty around building one, launching you into a favorable business position.

This customer base provides the business with momentum. Depending on the nature of the business, you can launch additional products or services to your base once you take over ownership. This can drive growth, increase income, and raise the value of the business.

Advantage 3: The potential for high ROI

Buying a business provides the potential for a very high return on investment. This ROI potential makes buying established businesses an attractive use of time and money for the right person. In fact, you may be able to completely recoup the amount you spent on the business within several years. Everything after that is pure profit.

In addition, you can further drive your ROI by growing the business and selling it several years later. For example, let’s say you buy a business for $1,000,000 that generates $250,000 per year in profit. You keep the business for four years and resell it for $2,000,000. In this scenario, you gain a 300% ROI (before taxes) in the span of four years—not bad by any standards.

Advantage 4: Less time requirement

Starting a business from scratch requires a ton of time, stress, and hard work. The initial stages can be extremely demanding, requiring long hours, hefty risks, and full devotion. While building from the ground up can be rewarding, it may not be for everyone.

If you choose the company carefully, buying a business allows you to bypass the time-intensive initial stages of starting a business from scratch. You can skip to the part where the business is earning good money. Additionally, you can choose a business where the day-to-day operational requirements are minimal.

This time savings allows you to focus on big-picture tasks like driving future growth or further automating tasks. Or, you could choose to spend time doing other things you love, like spending time with family or traveling. Buying a business can be a great way to develop a passive income stream, allowing you to build the lifestyle you desire.

“If you choose the company carefully, buying a business allows you to bypass the time-intensive initial stages of starting a business from scratch.”

Disadvantage 1: Large up-front investment

So far, we have talked about the benefits of buying a business. While there are many benefits, it also comes with several drawbacks.

Buying a business requires a large up-front investment. If you have a large pile of cash waiting to be utilized, this may not be an issue for you. However, it can be a stumbling block for many entrepreneurs.

There are ways around this, even if you aren’t in a strong financial position. For starters, you could tap into your personal or professional networks to see if anybody may be interested in partnering with you. You may find that friends, family, or business contacts may want to put up the money if you take responsibility for managing the enterprise.

Outside of your personal networks, there are a range of financing options available. SBA loans can be a great way to finance a business acquisition. Or, you can discuss seller financing with interested small business owners.

While buying a business does require a large up-front investment, don’t be discouraged if you don’t have the cash in the bank. You may be pleasantly surprised by what you find when you look into your financing options.

Disadvantage 2: Less flexibility

One of the most satisfying aspects of starting a business from scratch is the high degree of freedom and creativity available to you. As the owner, you have complete control over the critical initial stages. You create and refine the product or service, develop your team, build your company culture, and establish your brand, message, and voice. For many, these initial tasks can be immensely rewarding.

When you buy a business, you have less say over these aspects of the business. All of these questions have likely been answered and established. While there are always new questions to navigate and new directions you can go with the company, it will be less pliable than a new company.

Three Ways to Find an Online Business for Sale

Many business buyers wonder how to find businesses for sale. In general, there are three methods. These include:

• Searching online business marketplaces
• Utilizing your network
• Enlisting the help of a qualified business broker

Search online business marketplaces

If you are looking to buy your own business, online business marketplaces can be a great place to start. These marketplaces have numerous online business listings spanning a number of business models, industries, and niches.

Given the number of businesses for sale on business marketplaces, you have a better chance of finding one that meets your specific criteria. From small businesses to large international operations, there is something for everyone.

If you do decide to search online business marketplaces, understand that not all businesses for sale will be qualified or worthwhile investment opportunities. While you can find quality companies, some may not be worth your time and energy. Be discerning in your search and choose one that truly meets your needs.

Utilize your network

Another great way to find business opportunities is through your own personal and professional networks. Ask your contacts if they know of any businesses for sale. While this can be a hit-or-miss tactic, it sometimes can yield terrific results.

The advantage of this method is that you have a personal connection with the owner of the business. Depending on who introduced you, you may have more confidence in the quality of the business. Additionally, you may be able to start out with more rapport and trust between you and the seller.

“When you are ready to look for a business to buy, be sure to talk with a qualified business broker to explore your options.”

Enlist the help of a qualified business broker

Business brokers, or business Advisors, are professionals who help others buy or sell their business. While they often help sellers navigate the exit process, they can be a great resource for finding quality businesses for sale.

Most business brokers have extensive networks of individuals selling businesses. Likely, they have a list of businesses that are currently for sale, either by them or by their colleagues. When you are ready to look for a business to buy, be sure to talk with a qualified business broker to explore your options.

Key Considerations when Buying an Online Business

Buying a business can be a great decision for enterprising entrepreneurs, but success is never guaranteed. In order to maximize your chances of achieving a profitable acquisition, there are several key considerations you need to make.

Specify your goals

First, get clear on your goals. What do you hope to achieve by buying a business? Are you looking to add a passive income stream to your portfolio? Do you want to buy, grow, and then sell the business for more money in the future? How much time do you want to spend managing the business on a weekly basis?

“In order to maximize your chances of achieving a profitable acquisition, there are several key considerations you need to make.”

These are just a few of the questions you should be asking yourself. Before proceeding, it is highly important to have a detailed idea of what you want to achieve by buying. With your vision in mind, you can work to identify the specific criteria you are looking for in a business.

Establish your budget

Next, establish your acquisition budget. If you plan to finance the purchase with your own funds, get clear on how much you are able and willing to spend.

If you plan to use some form of financing, do your homework to learn what your financing options look like. Once you know your budget, you will have a much better idea of which businesses to pursue.

Get clear on your skill sets and interests

While buying and running a business can provide a high ROI, it does require a certain amount of skill and knowledge. Before you start looking for businesses to buy, take some time to get clear on your relevant skills and knowledge. From there, you can narrow down the pool of potential businesses to find one that is best suited to you.

At the same time, be real about your interests. Running a business in a field you love is much easier to sustain than running a business that you aren’t interested in. Given the amount of time and effort required to run most businesses, it pays to enjoy the process.

“Running a business in a field you love is much easier to sustain than running a business that you aren’t interested in.”

Set your buying criteria

Once you have set your goals, established your budget, and identified your skill sets and interests, it is time to set your buying criteria. Combining all of this knowledge, list out the specific qualities you desire in a business.

By choosing a business that plays to your strengths and interests and helps you move toward your goals, you set yourself up for a profitable and enjoyable ownership experience.