HOW TO BUY A BUSINESS WITH NO MONEY
How to buy a business with no money is often discussed and may seem impossible, but you really can buy a business with no money. You can buy a business with no money down if you have a systematic approach. There is no magic to buying a company with little or no money. What you lack in cash, you must make up in knowledge and skill. You can substitute knowledge for money. The basic deal structure will likely require the seller to hold a note (loan) for at least 20% to 100% of the deal. The balance must come from banks, alternative lenders, and other sources.
The most important skill required to buy a business with no money is not to be a jerk. It’s essential to present yourself as capable of operating the company you are acquiring with the ability to sustain and improve operations. You must demonstrate that you can repay the debt with your current resources and the business’s success. Develop a plan that allows you to grow revenue and improve profits significantly. This is the best guarantee that you will be able to satisfy the debt service.
“The Truth… If You Need a Business Loan”
If you need a business loan, you should be prepared to offer a personal guarantee before considering borrowing from a business owner or lending institution. It’s up to you to have a detailed business plan showing your mastery of the business and how you will satisfy all the obligations that the company demands. This may require extensive research and time to become an expert in the operation of the business. Be creative about tweaking the business model so that the business can produce more cash which equals more safety for all parties involved.
Baby Boomers are Retiring
I was involved in acquiring a retail gift shop that had been in business for over fifty years. It was on its second owner, who had operated the store for about 20 years, and they were looking to buy a Winnebago and travel the country in retirement. These folks were old school, had not adopted modern business practices, and still did their books by hand. Even more incredible was that they had not embraced the internet in any way to help grow the business. They had a one-page website with a glorified business card and an inactive Facebook Page.
There is an abundance of baby boomers retiring that will do this deal if you are willing to create a smart business plan. We submitted a business plan to the seller that included a seller note for 50% of the asking price. The note was to be paid in installments over three years, amortized over five years. A balloon payment would be due in 5 years, but this structure helped cash flow in the early years. The balance of the transaction was paid using cash advances on credit cards and a personal loan. The seller didn’t use any cash, but a personal guarantee was required on the personal loan.
The Business Plan
The business plan for the company was to reduce the store’s square footage by 50% and begin selling items with an E-Commerce site. Shopify was selected because it allowed for the quick formation of an online store. It also allows for a simultaneous listing on eBay, Instagram, Facebook, and Amazon without additional work. We also began an advertising program using Bing, Adwords, and Facebook. These actions delivered the following results:
- Rental expenses were reduced by 55% due to reduced square footage and negotiation with the landlord
- Sales increased by 300% by selling online
- The company increased its product line by 50% by dropshipping
It takes creativity to get a deal done with little or no money, but it can be done. This business was acquired with no money down, but it took a great plan coupled with excellent execution to make it a success. You also need patience, as this deal took four months. It took another six months to launch the online store and launch the advertising campaigns. The deal died at least three times before the company was finally acquired. Don’t settle for no. Know that a good deal will always attract money. Lenders need to know how good your business plan is to ensure their investment is safe.
Buy A Business With No Money
Baby boomers who own companies can’t retire until they sell their businesses or shut down. These owners need entrepreneurs to be creative and offer them a way out. It helps them financially, and their legacy is preserved. No business owner wants to see the business they spent decades building shut down. There are companies all over the country that can be purchased with a systematic approach and the right skills. Download free resources to start making offers right away. Business owners can’t find entrepreneurs with the knowledge to take over their companies. Get the knowledge today and own your own business tomorrow.
