March 17, 2022

How to Buy a Business with No Money: The Complete Guide

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How to Buy a Business with No Money: The Complete Guide

Unconventional Acquisitions

March 17, 2022

The most popular methods to buy a business with no money of your own are SBA loan and Seller financing. There are more ways such as getting an equipment loan, depending on the type of business you are buying.

Owning your own business is one of the best ways to generate ongoing wealth. But, of course, you already know that, and it’s why you’re ready to ditch the nine-to-five doldrums and strike out on your own. However, there’s one catch: You don’t own a business, and you have no interest in building one from scratch. Sound familiar?

Before resigning yourself to the soul-deadening rat race of working for others, consider this: Every day, motivated people like you buy existing businesses, becoming business owners in one fell swoop. Sure, you’re probably saying – that sounds great. However, maybe you don’t have the means to buy an established business.

We all have to start somewhere, after all. So you’re definitely out of luck in this case, right? Not quite. As crazy as it may sound, you don’t necessarily need cold, hard cash to acquire an established, income-generating business.

The savviest entrepreneurs often figure out ways to buy a business no money down – and not just because they’re strapped for cash. After all, why put your hard-earned money on the line for a business that could fail? Buying a business without forking over a dime is way less risky, and it’s more doable than you think.

If you’re still not sure if Biz Buying Might Work For You, We Highly Suggest You Take Our 9 Day Challenge.

Buying a Business with no Money: The Benefits

Being your own boss is the quintessential American dream. We can all admire the scrappy upstart who uses his passions to develop a business from the ground up. However, that path isn’t for everyone.

Maybe you’re eager to own a business but don’t want to have to sacrifice and scrape by until it’s off the ground. The sooner you can get profits rolling in, the sooner you can capitalize on them. Why not buy an existing business instead, then?

  • You are getting an established business with systems in place that you can duplicate.
  • You are going to have a strong base of customers when you start.
  • Get help from a good owner. Instead of starting a business, you haven’t run on your own, what about having guides and help from the guys who built and run it for years?
  • When you buy an existing business, much of the tedious legal work has been done for you.
  • The right business already has effective branding, a tried-and-true marketing strategy, and a roster of products and services.
  • You become the owner of something with tons of potential – especially when you factor in all of the enthusiasm and motivation that you’ll bring to the table.

Perhaps you’re sold by now and are ready to buy an existing business. There’s one little catch, though: You don’t have the means to purchase one outright.

You’re motivated, right? So instead of working for someone else until you’ve scrimped and saved enough money to buy a business, why not buy a business without money? Plenty of strivers make this happen every day, and you can join their ranks with a bit of research and a lot of hustle.

How to Buy an Existing Business With No Money

No Cash? No Worries!

A very common email we always get is “Ryan & Codie, how can I buy a business with no money of my own?“

The answer is pretty straightforward and sums up like this:

There are 3 steps to buying an existing business with no money:

  1. Finding the business that is right for you.
  2. Valuing the business properly.
  3. Closing the deal with external funding sources (Zero money of your own).

As discussed a bit at the beginning, there are multiple ways of closing a deal with no money of your own. Seller financing is the most popular method, where the seller allows you to pay off the business price over time.

We know, we know – it sounds too good to be true. But, if it’s possible to buy an existing business with no money of your own, then why doesn’t everyone do it?

The answer is pretty simple, actually: Most people aren’t motivated enough to do things the unconventional way. However, there are unconventional methods like this for acquiring businesses without paying any cash. You can use them to make yourself your own boss – the owner of an established business with customers, revenues, and all the trappings that go with them.

Guide to Buying a Business with no Money

If you’re trying to buy a business without paying any cash upfront, you need to target the right one. What’s the “right one,” you ask? Put simply; it’s one that’s owned by a highly motivated seller.

Picture this: Lydia has owned her business for 15 years and is approaching retirement age. She’s had the business on the market for several months with no bites. She has a lead on a great place in Florida, but she needs to unload the business quickly to make this happen.

Lydia is a prime example of a motivated seller. She wants out from under her business. She wants to ride out her golden years in comfort despite the profitability of her business. Sure, she’d love to get a cash offer; however, given the circumstances, she’s also probably willing to negotiate an arrangement with the right buyer.

That buyer can – and should – be you.

In addition to finding a business for sale with a motivated seller, it needs to be profitable. Still, it doesn’t have to be going like gangbusters to be worth your while. An underperforming business is a good one to target because the owner, again, is probably very motivated to be rid of it.

With your fresh take on the situation, there’s no reason you can’t turn things around; you just need to find a way to acquire it without paying any cash.

This is high time I told you how to buy a business with no money- let’s jump into this now.

Find the Perfect ‘Established’ Business to Purchase with no Money

So, how do you go about actually finding a business for sale with a motivated owner and other promising characteristics? Let’s be honest: Most sellers want cash for their businesses. With that in mind, you need to get a little creative to find the right option.

1. Email your people. Draft an email like this, go through your phone, email, and contacts, and send it out individually to your top-tier people and in a group to those who might be able to help you find deals.

2. Leverage your Social Media. Create a post like-

Social family – I am looking to get introduced to small business owners in Phoenix, AZ who are looking to potentially explore selling. Specifically consumer or
business services. Anyone come to mind I should speak to? 

If you have 1000 people on your friend list, all know you are looking to buy a business. Tell everybody in your friend circle that you are looking to buy a business.  This is so effective- someone from your community might see someone who is selling a business, and the first person that comes to their mind would be you.

3. Keep an eye on the Biz listing platforms. More than likely, you’ll just have to put yourself out there and find what you need. An obvious starting point is to peruse online marketplaces like BizBuySell and Flippa. We have a guide with a whole list of marketplaces where you can find great deals, be sure to check out. Walk around these platforms for a few days, and bookmark the businesses you like.

4. Google local brokers in your area, and keep a close relationship with them. Let them know you are looking for a Biz to buy, and you want to do this without any money of your own. This is called seller financing, which we are going to talk more about below.

Brokers are always ahead of everything in this world of biz buying. They are the first to know the deals before they are live on the marketplaces. In fact, many “good” businesses get sold without even being listed online; this is because the brokers have their own list of premium buyers. Now you know what to do- you need to be on that list.

5. Connect with a local business attorney or accountant, and ask them if they have any suggestions. Such professionals have their finger on the pulse of the local business community and can point you toward sellers who may be willing to work with you.

But, again, no one is going to explicitly state that they’re willing to sell to non-cash buyers, so you’ll have to reach out to promising options yourself and feel them out.

Pro tip: Try contacting sellers whose businesses have been on the market for several months to a year.

Using SBA Loan to Buying a Business with no Money of Your Own

Now that you have found a business to buy, you need funding. Luckily, there is an organization named SBA (U.S. Small Business Administration), which mainly helps people like you to purchase small businesses.

The beauty about SBA is they have relaxed requirements and usually have lower down payments as compared to traditional banks. Their process is pretty straightforward, although it takes some time (30-60 days) for them to do the review process to have you the loan.

Now say you got an SBA loan of 70% of the purchase price, how do you pay the rest? Own money? Absolutely not! You take an equipment loan to cover the rest. In most cases, SBA + Equipment loans together leave some good money on your hand even after paying the purchase price, which you can use to develop the business when you start.

Sounds simple? Yes, it is, however, takes time. And you can’t do everything alone. First, you would need to be clear of the whole process, and then you would need to take help from an attorney.

Seller Financing: Great way of Buying a Business with no Money

With persistence and motivation, you’ll be able to pinpoint a business for sale with a motivated seller who’s willing to work with you. Such sellers are often willing to extend seller financing to the right buyer.

Seller financing involves buying a business with a loan from the current owner. Typically, payments come from business revenues. The seller knows the financial state of the business. If the business is truly profitable, the seller should rest easy knowing that you’ll generate enough revenue to repay them in due course.

Of course, seller financing is still not the first choice of most business owners. With that in mind, you have to find ways to make your offer as attractive as possible. After identifying a business, you’d like to buy, put together an offer package. If the terms are right, the seller should be willing to play ball.

Needless to say, to make the offer package as enticing as possible, you should offer a short repayment period. If the seller knows they will get their money within a few years, they’ll be more likely to work with you. Likewise, offering large repayments can be valuable to motivate a seller to sell their business to you with no cash upfront.

One great side benefit of seller financing is that it keeps the seller indirectly tied to the business for a while. You can look at this as a sign that the owner believes in the business and is confident that, under the proper ownership, the business will generate enough revenue for you to repay them on time.

Other Ways of Buying a Business with no Money of Your Own

Seller financing, or owner financing, isn’t the only game in town for buying an existing business without any money. For instance, it’s also possible to buy a business using its own cash. Known as a leveraged buyout, or LBO, this method involves acquiring a business using its assets and cash flow.

In a leveraged buyout, you leverage the company’s assets to finance your purchase of it. The one sticking point – and it can be significant – is that the business must be sold for a lower price than the value of its assets.

If a leveraged buyout isn’t in the cards, don’t worry. There are still plenty of ways to buy a company without money. Here are a few other ideas:

  • Try a Pay-On-Performance Model – In this case, you and the seller establish performance benchmarks for the business. When these benchmarks are reached, you pay the seller an agreed-upon amount. These benchmarks can be based on things like operating income, net income, or revenues. The total paid amount is capped by a purchase price that you and the seller have outlined in the contract.
  • Shares Only – In exchange for working for the business you want to buy and accepting a reduced salary, the owner gives you shares in the company, making you a part-owner. As you grow the business and improve its profits, you can buy more shares until you are the primary owner.
  • Offer Free Services – Another option is to build sweat equity in the business you want to buy. Again, you offer to essentially work for free, handing over all profits to the owner until the financed amount is paid in full. Of course, you may not want to roll up your sleeves and work for a business, so this option may not be the most realistic one.

You can also cobble together various methods to buy a business without paying any cash upfront. For example, you can use income-generating business assets to pay off the seller quickly. In addition, you could bring in a few additional silent partners to help you acquire the business and then buy them out later.

You could also apply for a business acquisition loan or a small business loan. However, such options usually involve forking over at least some money upfront.

Tap into a Network of Strivers who always Buy Businesses with no Money

As you can see, the old adage “you have to spend money to make money” isn’t always true – and it certainly doesn’t have to be when buying a business.

You’ve got to believe me when I say it’s possible – we’re doing it, people in Our Mastermind doing it, and you can do it too.

Join UA’s 9 Day Biz Buyer Challenge for $49

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