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Buying a Business With Little To No Money


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Are you looking to buy a business but don’t have the money to do so? Don’t worry, there are ways you can buy a business with little to no money, here’s how. 

Many entrepreneurs have the desire to run their own business, but not necessarily by starting a new one. Buying an existing business makes sense for a variety of reasons, including existing customers, current sales, and ongoing cash flow.

When buying an existing business, you can skip the process of building your own infrastructure and starting from scratch. This is because there are already systems in place for everything including operations management as well customer email lists.

How to Buy a Business With No Money

There are some important steps to take when buying a business, even if you don’t have any money down.

1. Search for business owners ready to move on

The first step is to find business owners who really want to leave their existing business; perhaps even desperate to leave. One of the best ways to achieve this is to conduct research about local businesses, their owners, market, and industry. If you want to buy a business, it can be helpful to hire a business broker. They will help you find the right seller and negotiate the best deal for you.

Finding an owner that is highly motivated to exit their company is essential. A business on the market for a long time with no buyers is the perfect owner for this situation.

Another common situation is when the owner is close to retirement age or is considering retirement due to health issues. You might be able to convince them to forego their upfront payment if you show them you will continue to bring them income over the years. A similar occasion is when a business owner has passed away or a partnership where one partner wants to leave.

2. Seek out an Underperforming Business

You will have to compromise on quality or profitability if you wish to buy a business with no money. A company that is barely profitable or losing money, you have a better chance of buying it without a down payment. Even a moderately profitable business can go for no money down.

Therefore, finding an underperforming business gives you a chance to buy with no money upfront. To ensure this strategy will work, you must have management ability and overall experience to turn a business around.

3. Business acquisition loans

Once you’ve found the right business to purchase, it’s time to lock in the necessary funding. There are debt financing products that can work in these situations, but business acquisition loans are typically one of the best. They are specifically designed to assist entrepreneurs to acquire businesses and provide as much as $5 million with borrower-friendly rates starting at 5.5%.

When applying for a business acquisition loan, lenders will want to know as much as possible about the business. You will be asked to provide documents of the business’s financial history as well as the current value. Lenders will also require that you prove you’re in a position to ensure the business succeeds. The lenders will consider your personal finances along with your business plan for creating continued success as the owner.

4. Acquire Owner Financing

Owner financing in business acquisition means instead of receiving a bank loan, the owner would lend you the money for the purchase. When you buy a business, you will need to put down the purchase price in a contract. You will need to state how many payments you will make, what the interest rate is, how much each payment will be, and how long the loan will last.

It is usually more expensive in the long run to buy a business using seller financing, but the goal is to buy the business with no money down. So the cost is unavoidable.

Can a business be purchased with 100% seller financing?

Most experts in the field will agree on a similar conclusion: though it’s not impossible, it is indeed challenging. With most business acquisitions of this type, sellers will typically offer owner financing in the range of 20% to 50% of the remaining balance after a down payment.

A business owner who is willing to offer 100% seller financing is likely someone who wants or needs to leave their current business and may not need the money immediately. Finding 100% seller financing from an owner trying to exit immediately is more likely than from a business that is simply underperforming.

5. Buying a business with no money through sweat equity

many successful business owners say, who have used this strategy, that sweat equity is a great way to buy a business. The owner will work for free, with the idea of making more money in the long run. The idea is to gain goodwill and a good reputation in order to sell the business for more in the future. 

6. Using the help of investors to buy a business

Getting investors to back you without any contribution is difficult but not impossible. To succeed, you will need a strong network, personal qualities, as well as the potential and quality of the business you are looking to acquire. Developing a business plan from scratch is much easier than convincing investors to support you if you do not have any money.

When you find an underperforming business with solid potential or a business owner who is looking to sell, you may be able to convince them to put up the money.

With experience, proven skills, and investors who believe in you, you have a chance to convince them to purchase the company while taking on day-to-day duties. Investors will have a greater say in business decisions than if you put up your own capital, and they will gain profits from your company in return for their investment. The ideal scenario is to bring in a silent partner who will provide financing without sacrificing too much control.

Buy a business with no money

Allow yourself time to research the industry and find a suitable business for sale. In order to buy an existing business with little or no money, it takes time and effort. It is possible to buy a business without putting any money down. Be prepared to show the owner that you have the right skills and a good strategy.

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