

As the startup surge continues, one way to become a small business owner is to buy an existing business. According to the BizBuySell Insight Report for Q4 2021, the business for sale market has shown “slow, yet steady growth” for the year, “, particularly in terms of buyer demand for financially-healthy businesses.”
If you’re in the market for a small business, you’re likely going to have to contend with rising prices. Median sales prices rose about 30% in 2021, “finishing the year at $324,500 in the fourth quarter.”
According to the BizBuySell Small Business Survey, 60% of buyers say profitability and strong financials are a purchase requirement, followed by trained and skilled employees (37%). Of the financials are subpar, 18% want a discount on the sales price.
Most in-demand types of businesses were: the service sector (37%), restaurants (26%), and wholesale distributors (25%). Specifically, buyers were looking for “pandemic-resistant businesses,” such as liquor stores, gas stations, auto repair shops, and e-commerce.
Several factors are contributing to business owners putting their companies up for sale.
The most common reasons given are “retirement and general burnout.” But running a business through two years of a pandemic has taken a toll—43% said “pandemic fatigue was moderately to extremely motivating” for them to consider selling their businesses. Plus, one business broker noted that “the challenge of finding and keeping employees is a deciding factor to sell now.”
As unfortunate as that is, it’s good news for people looking to buy a business. More than 78% of business brokers surveyed expect more sellers to enter the market in 2022, with 25% saying they expect significantly more sellers.
Many baby boomer business owners are seeking to exit their companies as well, opening up more opportunities for business buyers, many of whom are entering the market after quitting their jobs. BizBuySell reports that 21% of business buyers identified themselves as being part of the Great Resignation. And 73% of business brokers say they expect an increase in the number of buyers hitting the business-for-sale market in 2022.
So, where do you start if you want to buy a business? BizBuySell is the largest online marketplace of businesses for sale. You can also find a business broker by checking the professional organizations, such as IBBA.org, and its search for a broker tool or looking for For Sale By Owner (FSBO) opportunities.
As you begin your search, ask yourself these questions:
Once you identify several businesses you’re interested in, call or email the business broker (or owner) to get more information. Remember, at this stage, you’re in a filtering process, so you’ll need to ask more questions, including:
Once you’ve narrowed down your choices, consider:
Making an offer is the beginning of the negotiation—not the end. Offer a price you feel comfortable with, subject to due diligence. You should be able to write a check for the down payment. You’ll also need to check that you’ll have enough money after buying the business that you have enough money for your working capital needs and to live on.
After getting your offer, the seller may ask for a larger down payment, shorten the payout period, or have other demands.
Once you and the seller agree, it’s time for your final due diligence:
Once you and the seller are satisfied, you can close the deal and get ready to take ownership of the business.
Don’t try to do this yourself. Get the help you need from an accountant, an attorney, and a SCORE mentor. You can find one here.
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Funded, in part, through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.