Business For Sale

If you’ve ever dreamed of being your own boss, you have probably thought about having a business of your own. You’d be able to create your own schedule, take off work when you wanted, and not have to report to anyone else. However, many are scared off by the idea that they’d have to come up with a business idea on their own, find the money to open that business, pick a location, and hire the staff to operate it. These fears are compounded for those who do not have a degree in business or any prior business experience. However, buying an existing business can eliminate many of these fears.

In this guide, we discuss the benefits of buying an existing business, how to go about doing so, and some of the most popular industries to look into. We will also explain where to find businesses for sale to help you on your way to following your dreams.

Is Buying an Existing Business Better Than Starting One?

Buying an existing business offers several benefits over starting one from scratch, whether that existing business is a franchise or one that is individually owned. That is because you don’t have to work on getting your business off the ground if it already exists. In fact, 25% of startups fail within the first year of opening, and 50% of those remaining fail within the first five years. Many people choose to buy an existing business for this reason alone.

Some of the other advantages to buying an existing business that you do not have with a startup include:

• Existing Business Plan and Brand: Because the business you buy has already been opened, you will have a business plan to follow. Sometimes you will get one that you have to follow to a T, and sometimes you will get loose guidance to follow. Other times you will get a business plan that may not work great but that you can start from, especially with some individually owned businesses. Nevertheless, you have a place to start, which will make continuing operations go smoothly.

With that business, too, comes an established brand, representing what the business is and what it stands for. The name and logo allow for easy recognition, which is important when trying to draw in customers.

• Existing Customers: If you buy an existing business, you will most likely find that some customers come to your business because they recognize your brand and are familiar with what they will get from you. Because startups have to establish their brand before starting their business, it will take some time and money to build up a significant customer base.
• More Financing Options: When you already have a business plan in place and proof that your business is either making revenue or, in the case of a franchise, has the potential to make good revenue, lenders will be more inclined to provide funding to your business. That is because it proves to them that you have the ability to pay back the money borrowed through the loan. We will touch more on financing options later in this guide.
• Access to Training: If you decide to go the franchise route, you will usually receive training from the franchisor in the beginning stages of opening the business. Because you are representing their brand, they want to see you succeed. Some franchises even offer further training as your business develops. If you decide to buy an individually-owned business, you may not have this same access to training, but you will have a trained staff that already works for you. This gives you a head start over those who are opening their own business.

How Much Does It Cost to Buy an Existing Business?

The cost to buy an existing business varies depending on whether you are buying a franchise or an individually-owned business. Starting your own business typically costs $30,000-$40,000. On the other hand, buying a business that was individually owned usually costs about $150,000-$200,000. Finally, buying a franchise typically costs about $100,000-$300,000, although you can find some that cost less than $50,000 (we’ll explore those options in a bit).

With that being said, though, these numbers can be significantly lower depending on the type of business you have in mind. It’s important to note, too, that while starting your own business can be less expensive, it can also be harder to receive loans and other forms of financing. That’s because you can’t prove how successful your business can be like you can with the other two options.

Which Franchise Is the Cheapest to Own?

If you are looking for a low cost business for sale, these franchises could be good options for you:

• Club Z! Tutoring: This franchise offers private tutoring at home and online to students in preschool through college. Students who use this tutoring service typically see an improvement of two letter grades in just 60 days. You do not need a background in education to be a successful franchisee. You will only need strong management skills and $40,000 in liquid assets. You can expect your total investment in this franchise to range from $30,000-$55,000.
• Oxi Fresh Carpet Cleaning: This franchise is the world’s most environmentally-friendly carpet cleaning system. They clean by using an oxygenated system to remove stains in a way that is safe for both children and pets. If you invest in it, you will receive start-up support, training, and ongoing operational support. Your total investment for this franchise will range from $40,900-$50,000.
• Blue Moon Estate Sales: This franchise helps families and companies liquidate their assets through estate sales. Contents of the home or business will be staged and priced before the sale is open to customers. If you choose to invest in this franchise, you will be eligible to receive enough funding through third-party sources to cover startup costs. You will also have the opportunity to create your own hours and work from home. You will need $50,000 in liquid capital to start this franchise. Total investment may be as low as $40,590.
• OctoClean: This franchise specializes in cleaning commercial, school, and hospital buildings. It began as a small family-owned business, and many of its franchises are the same way. The franchisor frequently works with franchisees to help them succeed. To invest in this franchise, you will need at least $10,000 in liquid assets. You can expect total investment to range anywhere from $13,500-$31,000.

How Can I Buy a Business With No Money?

The only way to buy a business with little or no money is to take out a loan or receive some other sort of financial support. With that being said, many financial institutions require that you be in good financial standing and have used personal assets to help pay for your business before they will award you a loan.

If you would like to try an alternative route for financing the purchase of an existing business instead of applying for a loan, you have a few options. First, you can look into finding a partner who can help you pay for the business. This might be a friend, family member, colleague, etc. If you elect to go this route, make sure you and your partner establish expectations from the start. These expectations should include details on who will be responsible for what, what percentage of the profits each of you will receive, and what each of you are and are not allowed to do within that partnership.

Another viable option you can take when pinning down funding for your franchise is to do some research into what financing options are available to you through the franchise itself. Some franchisors offer capital to support you when you first open your business. However, if you decide to choose this option, you should note that many of these franchises will require a good credit score and proof that you are investing some money yourself into the business as well.

Some new franchisees choose to use part of their retirement funds to start their business. This is called a rollover for business startups (ROBS). When you choose this method of funding, you will not have to pay a penalty or tax for withdrawing that money early. However, the provider who offers you the ROBS may charge a one-time fee to access that money.

If none of these alternative options appeal to you, taking out a loan for your business is your best bet. You can figure out how much you can spend on a business by using this net worth calculator.

How Do I Get a Loan to Buy an Existing Business?

If you do decide to take out a loan to help fund your business, you have several avenues from which to choose, such as banks, credit unions, the government, and alternative lenders. To find the right one for you, make sure to do your research about rates and eligibility requirements.

• Banks: Banks offer traditional commercial loans. When you apply for a business loan through your bank, you will often have to provide them with:
  • Your financial history. This includes any debt you have, bank statements, and credit score.
  • A business plan. Because you do not have the business yet, a strong plan is key to getting funding. It will help the bank determine the risk of funding your business. With a franchise, it can be easier to get one of these loans because the plan has proven to work in the past.
  • Collateral. Depending on the type of loan you apply for, the bank may ask you to provide assets that they may seize if you fail to pay back your loan.
• Credit Unions: These nonprofit organizations offer loans to their members. While loans from these institutions often come with lower interest rates and higher approval rates, you may experience more limitations in terms of how much money you receive and how many physical locations there are for you to visit. To be eligible for one of these loans, you must:
  • Be a member or on the path to membership.
  • Have a good credit score.
  • Provide details on existing debt or expenses so that the credit union can determine your ability to pay them back.
• Small Business Administration (SBA): While the SBA will not give you a loan directly, they will guarantee that you receive a loan from another lender. For franchisees, the SBA 7(a) loan is your best option. You may be granted up to $5 million that you may use for startup costs and purchases. According to the SBA website, you are eligible for this type of loan if your business:
  • Operates for profit.
  • Is considered a small business by the SBA’s definitions.
  • Is engaged in, or proposes to do business in, the United States or its territories.
  • Has reasonable invested equity.
  • Uses alternative financial resources, including personal assets, before seeking financial assistance.
  • Is able to demonstrate a need for a loan.
  • Uses the funds for a sound business purpose.
  • Is not delinquent on any existing debt obligations to the U.S. government.
• Alternative Lenders: These are private companies that offer financial opportunities to individuals and businesses. It is often quicker and easier to receive loans from these companies. However, they may come with shorter terms, more frequent payments than loans from other institutions, and smaller loan amounts. Alternative lenders’ eligibility requirements will vary depending on lender, but some of the common details they’ll check include your:
  • Business experience.
  • Credit score.

Red Flags When Buying a Business

Before you officially buy a franchise, it’s important to make sure that the franchise is legitimate and not just trying to draw franchisees in to make more money. Some red flags you should look out for when considering whether to invest in a certain franchise are:

1. Lack of transparency: This might be in the form of waiting until very late to send you the franchise disclosure document (FDD) because they do not want to tell you about concerning details without justifying them to you first. Or they may provide little or no information about the franchise’s financial situation in the FDD. Or, when telling you more about themselves, they may paint a picture that seems to be too good to be true and reveal nothing about struggles they have had. This lack of transparency suggests that they are trying to hide something.
2. Limiting your communication: If, when going through the validation process, the franchisor discourages you from talking to franchisees other than the ones they recommended to you, you should be hesitant to invest in that franchise. It could mean that they want to hide something from you. The same is true if they discourage you from talking to an attorney about the FDD and franchise contract.
3. Negative feedback: If you do decide to talk to franchisees about their experience with the franchisor and receive lots of negative feedback, take it as a red flag. If several people say something, it means that the franchisor does not provide the support you probably want as a new franchisee. Another warning sign is if the franchisor overall is not highly regarded within their industry.
4. Focus on up-front fees: If a franchisor raises up-front fees and either keeps royalty fees stagnant or lowers them, it could suggest that the franchisor cares more about making money than supporting the franchisees.
5. Lots of discounts: Another indicator of a franchisor caring only about money is if they decide to offer you lots of discounts on your up-front or royalty fees. It suggests that they care more about onboarding a lot of franchisees and less about assisting the franchisees they already have.
6. Pushy franchisors: The time it takes you to decide which franchise you are interested in investing in, do your research, talk to the franchisor, and sign your contract and make your first payment should be about four to eight weeks. If the franchisor wants you to speed up your process, it could suggest that they just want your money. You may also notice it during the discovery day in which you are invited in to meet with the franchisor and see first-hand what day-to-day operations look like. If you are being rushed through the day and do not get to see much, you can assume that the franchisors are in it for the money and not to build up the overall quality of the franchise.
7. Lots of litigations: A litigation refers to a legal action being taken. If you find that the franchisor has had ten or more litigations in the past ten years, it could suggest some turbulence in the waters. You may want to consider a different franchise instead. It’s especially important to note who’s suing and why in each of these litigation cases.

Fortunately, you can find a quality business for sale in the U.S.A. on Franchise.com so that you don’t have to worry about wasting money or not getting enough support throughout your journey as a franchisee. You’ll only have to decide which industry you’d like to franchise in first.

What Businesses Are in Demand Now?

There are several industries with businesses that are in demand right now, including senior care services, fast food, and home improvement. Let’s go into more detail about them.

Senior Care Services

As medicine improves, life expectancy increases. Because of that, the number of people over the age of 60 years is on the rise. According to the World Health Organization, the number of people 60 years old and above has surpassed 1 billion. That number is expected to grow to 1.4 billion by 2030 and 2.1 billion by 2050. As those populations get older and have a more difficult time taking care of themselves, they will need senior care services to help them.

There are several franchises available in this industry. Acti-Kare provides care for not only seniors, but expectant or new mothers, children, pets, and any family member recovering from an injury or surgery as well. If you choose to go with this franchise, you will receive:

• Pre-screened, qualified staff
• Training
• Advertising
• Marketing support
• A call center
• Ongoing support

Another senior care services franchise you may choose to invest in is Visiting Angels. They have been providing aid to senior citizens for 20 years now. Instead of focusing on making a profit, they measure success based on the quality of life of those who use their services. They ranked #1 of all Senior Care Franchises by the Franchise Business Review.

Fast Food

When people have busy schedules or aren’t in the mood to cook, they will often turn to fast food for their meals. You see fast food restaurants everywhere nowadays. Because of their prevalence and the number of consumers who buy from them, they’re a popular choice among first-time franchisees.

Vocelli Pizza is an example of a franchise option for you to invest in. With almost 100 locations and 30 years of experience, you will have lots of guidance when you start up this franchise. Plus, it is often listed among the top 100 pizza chains in the U.S., so you are sure to find a loyal customer base upon opening.

Home Improvement

During the heart of the COVID-19 pandemic, the overall U.S. economy diminished by 3.5%. However, home improvements went up by more than 3%. With more people working from and spending time at home, perhaps they decided they wanted a nicer place to dwell in every day or wanted more space for quiet time when their whole family is home. Whatever the case, though, home improvement has become a lucrative industry to get into.

Decorating Den Interiors is an interior design franchise that has been making homes more beautiful for decades. You do not need a degree in design to invest in this franchise. You will receive professional training upon purchase. You will also have access to over 150 brand name manufacturers and suppliers at wholesale prices.

N-Hance is a franchise that refinishes wood kitchen cabinets, floors, and more. By offering their services at a fraction of the traditional cost within a fraction of the time it normally takes, this franchise rises above their competitors. If you are looking for low-cost franchises with a high profit, this is a good option for you. Not only that, but investing in this franchise means receiving the tools and strategies you need to succeed from the start.

What Is the Best Way to Find a Business to Buy?

If you want to know how to find a business to buy, the answer is to use Franchise.com. Whether you are looking for a small business for sale or a big business for sale in the U.S.A., Franchise.com has a directory full of franchises and business opportunities for you to choose from. You can filter results based on your location, the investment cost, category, or industry. No matter what your ideal business is, you are bound to find something on Franchise.com. You can start searching in our directory.