Finding a buyable small business can be challenging, especially if you don’t know where to look.

In this article, we’ll discuss several places where you can find small businesses for sale and some tips when purchasing a small business.

Key Takeaways:

• If you’re looking for a buyable small business, first do a thorough scan of the local area. If your search turns up no good results, work with a business broker or browse small-business-for-sale websites.
• If you still can’t find something that satisfies the criteria you have, launch an advertising campaign so attractive businesses find you instead.
• If you need financing to purchase a small business, Llama Loan can help you secure the financing that’s best for you.

Where to Find a Small Business for Sale

Search for Local Businesses

There are small businesses for sale all over the place, which means your search area should start small and expand as you see what’s available.

Consider the local area before you contact business brokers or search on small-business-for-sale websites. You may find there are plenty of businesses for sale right before your eyes, and they may not be advertising their desire to sell because they want to avoid negative consequences.

You can call, email, or message businesses to determine which ones are interested in selling and which aren’t. If a business owner has no intention of selling, ask if they know of any businesses that are for sale.

In many cases, business owners are more inclined to sell to someone who’s part of the community. Also, working out a deal may be easier and less expensive because you can meet face to face to negotiate.

But before you pursue a local business, do an exhaustive search to know exactly what’s for sale in your area. After all, you don’t want to close a deal and find out immediately after that you could’ve got a better one. Go to the local Chamber of Commerce, check with the BBB, and attend local conferences and meetings to ensure no business slips through your radar.

Check With Business Brokers

When a business is looking to sell, they may hire a business broker for assistance. Essentially, business brokers connect buyers with sellers, and they can also help with the negotiations. Business brokers can have a handful or dozens of available businesses in their network, and each broker has its own way of operating.

Of course, using a business broker to find buyable small businesses has pros and cons, so it’s wise to consider them before getting assistance from one.

• Pro: Tell them what you’re looking for and they’ll show results that satisfy your criteria.
• Pro: They can tell you which businesses to avoid.
• Pro: They can help you land a good deal by advising you during negotiations.
• Con: If you secure a deal with their help, you’ll have to pay a commission.
• Con: The broker may work to get the seller a favorable deal at your expense.
• Con: If the broker’s network is limited, you could miss attractive opportunities.

Finally, even if you’re getting help from a business broker, you shouldn’t rule out bringing on a business attorney. Since securing a deal is the number-one priority for any broker, a business attorney will operate with your best interests in mind to ensure you get the best deal possible.

Browse Small-Business-For-Sale Websites

Sites like bizbuysell.com, franchisegator.com, and bizquest.com list thousands of small businesses and franchises that are currently for sale. Bizbuysell.com, for example, has more than 100,000 businesses listed at any time, and you can use a range of filters to narrow your search. Additionally, the listings are pretty detailed, and most have pictures.

These sites are especially helpful if you know you want to purchase a small business but you don’t know what kind. It’s easy to see what’s available and they keep track of what you’ve viewed.

But the biggest advantage here is you’ll save time if you know what you’re looking for. Also, they send out notifications when a new business is added, so you’ll be alerted if a new listing meets your criteria. Plus, the sites can help you get in touch with business brokers.

But a business-for-sale site shouldn’t be your only source. After all, many businesses don’t list on them, so you could miss a good deal if you don’t search outside these platforms.

Finally, don’t rule out using social media pages to find buyable businesses. Sellers are connecting with buyers on Facebook groups all the time.

Look For Advertisements or Make Your Own

If you don’t have time to go through thousands of listings on small-business-for-sale sites, and you want to avoid working with a business broker, consider advertising your intent to buy a small business in local publications and on social media. You could even put up fliers around town to get the word out.

But if you go this route, just know you may get bombarded with offers that aren’t what you’re looking for. This is why you need to make your ad somewhat specific. Make it clear the kind of business you’re looking to buy, and try to include as many details as possible without making the ad overwhelming.

What to Consider Before Purchasing a Small Business

See What’s Out There

Before you buy a small business, you should do extensive research to see what’s out there. If you do, chances are you’ll find a great opportunity that others may have overlooked.

Utilize all the sources you can so you leave no stone unturned. After all, there may be a fantastic, local opportunity flying under the radar because listing sites and brokers have missed it.

Once you have a feel for what’s available, determine the type of small business you’re looking to purchase. Is a brick-and-mortar establishment what you’re after? Is an online site more your speed? Are you trying to franchise?

To answer these questions, you’ll need to answer the following questions first:

• Will the business be a part- or full-time commitment?
• Will you be running it by yourself or do you need employees?
• How much do you intend to spend to operate the business?
• Do you intend to scale the business or keep it a similar size?

After answering all these questions, you should be able to zero in on an attractive opportunity. Once you do, reach out to the business so you can understand their operations, financials, etc.

And when you’re interacting with owners of attractive small businesses, don’t be afraid to mention you’re considering other options, as doing so could offer favorable deal terms you wouldn’t have got otherwise.

It’s important to note that if a business is making it difficult to get information that would help you make a decision, take this as a blaring red flag and move on.

Hire a Business Attorney

Hiring a business attorney before you purchase a small business is a wise decision for a handful of reasons.

For one, a business attorney can help you identify good opportunities and make sure you stay clear of bad ones. Therefore, if you do decide to hire an attorney, choose one who’s experienced and able to prove a track record of success.

Also, a business attorney can help you negotiate with business owners and/or their attorneys, and this assistance may yield a first-rate deal that would’ve been hard or impossible to secure on your own. A qualified and experienced business attorney will work with your best interests in mind, and their ability to take emotion out of the equation is sure to pay off.

And, of course, a business attorney will ensure all necessary paperwork is signed, certified, etc. so preventable legal complications don’t arise later.

But their assistance won’t be cheap, especially if you need a range of complex processes handled with care and precision. In fact, you could pay $150-$325 per hour, depending on who you choose and the services you need rendered.

Sure, it may seem expensive at the outset, but consider how much you could spend if you miss something in the fine print or fail to follow the letter of the law.

Due Diligence

Due diligence is essential before purchasing any small business. If you fail to take certain steps, you could be saddled with a heavy burden that’s difficult to escape. Again, hiring a skilled and experienced business attorney is a smart decision if you want your due diligence to be as thorough as possible. But if you don’t want an attorney’s help, here’s what you should do:

• Get Financial Statements & Tax Returns: With these documents, you can assess the company’s financial health and get an idea of its future profitability. Balance sheets, cash flow statements, and income statements should be assessed before purchasing any business.
• Review Assets & Liabilities: You need to understand the business’ assets and liabilities. If you don’t, you could unknowingly purchase a business with liabilities that far exceed its assets.
• Review Contracts & Legal Agreements: If the business you want to purchase has signed a number of contracts and legal agreements, you’ll need to understand their terms. Most contracts and legal agreements aren’t automatically voided by a change in ownership.
• Review Intellectual Property: Does the business have patents, copyrights, trademarks, or other kinds of intellectual property?
• Interact With Key Customers: This one may be challenging but it could detail incredibly helpful insights. Interacting with customers could give you an idea of why they chose the business, what their expectations are, etc.
• Check Reviews: Has the business received positive feedback on popular reviews platforms? If not, this could mean you’ll be fighting an uphill battle once you take over.

Type of Acquisition

How you intend to acquire the business is important as well. Will it be a horizontal, vertical, or conglomerate acquisition? Will you need a subsidiary? It’s best to understand what your options are before selecting a method of acquisition. Here are some of the most common types of acquisitions:

• Horizontal Acquisition: If you’re looking to purchase a business that’s similar to yours in size, operations, and customers served, consider a horizontal acquisition. This kind of acquisition can result in increased market share, higher profits, and less competition.
• Vertical Acquisition: If you’re after a business that’s higher or lower than yours in the supply chain, a vertical acquisition should do just fine. A successful vertical acquisition can cut costs, eliminate redundancy, and provide more control.
• Conglomerate Acquisition: Is the business you want to purchase totally unrelated to yours? Then you’ll probably need to do a conglomerate acquisition. Just know that these can be more trouble than they’re worth.
• Triangular Merger: If you have a subsidiary, consider a triangular merger. This way you can merge the target company with your subsidiary and save on taxes and other expenses.
• Consolidation: Looking to take competition out of the marketplace? Want to reinvent your brand’s identity? Try consolidating. Your company would merge with the target company to form a totally new entity, and this could grow market share and further market penetration.
• Market Extension Acquisition: If the business you want is similar to yours, but they’re reaching a different market, a market extension acquisition is likely to bear fruit. This way you can cater to both markets without spending a ton of time and money on building credibility.

Term Sheet or Letter of Intent

Before you come up with a purchase agreement, you’ll need to draft a letter of intent (LOI) or term sheet for the owners of the target business to sign. Either document will include the terms you’re looking to secure, and drafting one will show that you’re serious about getting a deal done. Make sure your letter of intent or term sheet has the following:

• Purchase price
• Deal structure
• No-shop provision
• Key closing conditions
• Time table
• Non-compete clause
• Confidentiality obligation
• Clause granting access to employees and books
• Seller indemnification obligations
• Dispute resolution terms

In most cases, the terms in letters of intent and term sheets are non-binding. However, the no-shop provision should be binding so your due diligence isn’t rushed.

Final Thoughts

If you’re looking to purchase a small business, thoroughly scan the local area to see if there are any attractive businesses for sale. If this doesn’t yield what you’re after, work with a business broker or browse small-business-for-sale websites. Finally, if you’d rather have businesses come to you, advertise your intent to buy via popular channels, including social media sites.