Considering joining one of the millions of small businesses by purchasing an established brand?
Congratulations, you’re on step one to becoming a business owner!
That said, while there are many benefits to purchasing an established business as a startup or entrepreneur, there are also lots of things to factor in along the way.
In this article, I will take you through the steps you need to consider when buying a business in 2025, to help you decide whether or not it’s the right idea for you.
Short on time? Here are the key takeaways
Step 1. Find a Business to Buy: Search for a business that meets your requirements regarding price, industry, and profitability.
Step 2. Establish a Budget: Make a budget to ensure you don’t overspend or walk away from negotiations too early.
Step 3. Do Your Homework: Buying a business is a big purchase, so make sure you’re doing plenty of due diligence beforehand.
Step 4: Value the Business: Don’t just take a seller’s valuation at face value. Get the business valued independently.
Step 5: Create a Business Sale Agreement: Work up a detailed business sale agreement to ensure you receive all assets and avoid future issues.
Why Would You Consider Buying a Business?
Now, you might be asking yourself, why would I buy a business? I’m an entrepreneur. I’m looking to start one!’
Well, buying a business doesn’t necessarily mean you aren’t starting it, and can also come with several benefits that starting from scratch can’t offer.
For example, perhaps you buy the domain and trademarks associated with a specific name before turning it into a completely different business. Or maybe you are interested in launching a new product or service in an industry, and you want to start with an established customer base.
Buying a business comes with some costly upfront costs, but access to customer information, existing infrastructure, and brand recognition can save you a lot of money and time (and headaches!) down the line.
It also ensures you can start generating revenue much quicker than starting from scratch, which will help you invest more back into your business and scale quicker.
5 Steps to Buying a Business in 2025
Step 1. Find a Business to Buy
First things first, you need to a find a business you want to buy!
The easiest way to start would be to search ‘business for sale,’ but that advice is about as good as saying, ‘just Google it.’
Instead, start by narrowing down these important questions.
- What knowledge do you have? While it can be tempting to move into a brand new industry because of the profit margins, if you don’t understand the inner workings, you will struggle to continue or improve on that success without a steep (and likely expensive) learning curve.
- What do you feel passionately about? However, it’s not just about your knowledge, it’s also what you care about! After all, many people start a new business venture because they don’t enjoy the industry they’re currently working in, so there’s no point in buying a business that is in that same industry just because it is comfortable. It’s much easier to succeed in business if you enjoy going to work.
- What is the end goal? Lastly, consider what it is you want to get out of purchasing your business. Is the aim to build up the business and run it yourself, or do you plan to sell it for a profit in the future? Is the goal to become self-sufficient or build a global empire?
Once you’ve answered those key questions, you can start searching for the right business that meets those key points.
However, I still wouldn’t recommend doing this on Google! Instead, look at online marketplaces like Upflip, Flippa, or MotionInvest. Or, consider working directly with a business broker. They’ll likely charge a big fee, but they will also significantly reduce any risks involved.
Step 2. Establish a Budget
Next, it’s also important to establish your budget. For some, this may actually act as step one, but personally, I think it’s best to scope out what you are looking for first. After all, if you finish step one and realize you don’t want to buy a business and would prefer to launch your own, then you don’t need to worry about pulling a budget together to buy one!
Creating a budget is crucial for purchasing a business as it prevents you from overspending and making emotional decisions rather than ones based on analytics.
Make a note of your current financial picture, and think about how you plan to purchase your chosen business. For some, all funds will come from savings and personal accounts, but for others, it may be that investment comes from external sources, such as angel investors or a bank.
When you’re doing your budget, don’t just focus on purchase prices. You also need to factor in how much income you hope to make, how much you might lose if you’re leaving a 9-5 to start your business and any large monthly expenses the business may require, such as commercial rent.
Step 3. Do Your Homework
Now that you’ve followed steps one and two let’s say you’ve found a business that meets all your expectations. It’s in your ideal industry, it’s got all the potential in the world, and it’s coming in under budget.
Now it’s time to get to work. Buying a business shouldn’t be something you rush, and doing your due diligence is crucial for ensuring everything is as it seems. By conducting thorough research, you ensure there won’t be any nasty surprises when you take the leap.
Doing your homework also gives you more time to get familiar with the ins and outs of running that business and deciding whether or not you still want to sign on the dotted line.
Step 4: Value the Business
If the chosen business passes all your checks, it’s time to get it valued. Sure, the person selling the business will give you a price, but it’s always necessary to conduct your own valuation, even if you think what they are asking for is fair.
Many small business owners have never had their financials audited, making it difficult to be sure you are getting an honest view of the business performance.
You need to see a few years of financial records, cash statements, and balance sheets to truly understand what’s going on behind the scenes.
Ask your own accountant or bookkeeper to go through the documents as well to ensure nothing is getting hidden from you.
Fortunately, there are several laws in most countries around disclosing certain business information. It’s worth swatting up on what sellers must tell you before engaging in negotiations to see whether or not your chosen business sellers are acting in good faith.
Step 5: Create a Business Sale Agreement
If everything lines up as it should and your accountant is happy with the business records, you’re ready for the final stage: creating a business sale agreement.
Your business sale agreement needs to include every detail of the sale, regardless of how small, ensuring the transfer of ownership goes off without a hitch.
That might sound quite complex, and that’s because it is! However, you need a detailed business sale agreement to ensure you are protected from any potential issues. I’d always recommend getting a lawyer to help create or review your agreement, but that isn’t always the most cost-effective approach.
There are also platforms like nolo.com or lawdepot.com that offer templates for sales agreements that you can then tweak to suit your needs.
Before You Buy, Why Not Try?
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