Guides
Straight answers for buyers and owners.
How to buy and pay for a business, and for owners, fees, value and timing. Written by Ayodele Olasiji of Optimax Commercial, a brokerage that works with buyers already under NDA.
Buying a business
Buy a business
- How much money do you need to buy a business?With an SBA 7(a) loan, plan on at least 10% of the total project cost in cash, plus closing costs and reserves. A worked example, what counts toward the 10%, and where a seller note fits.
- How do you evaluate a business before you buy it?Check the owner's real earnings against tax returns and bank deposits, test whether the earnings survive without the owner, read the lease, and see what the price asks you to believe. A plain checklist.
- How do you find businesses for sale that are not listed?Many good businesses sell without a public listing. Where off market deals come from, how to reach owners directly, and how to get on a broker's buyer list so you hear first.
- Why do business brokers make you sign an NDA first?A confidentiality agreement protects the seller's staff, customers and price from leaking, and it protects you by unlocking the real numbers. What an NDA covers, what it does not, and what to check before you sign.
- What is SDE, and how do buyers use it to price a business?Seller's discretionary earnings is what a small business earns for one owner operator: profit plus the owner's pay, one time costs and personal costs run through the business. How to calculate it and check it.
- Asset purchase or stock purchase: what is the difference for a buyer?Most small businesses sell as asset purchases, where the buyer takes the assets but not the old company's debts. In a stock purchase you buy the company itself, history included. Pros, cons and what to ask.
- How long does it take to buy a business, step by step?Buying a business usually takes months, not weeks. The stages in order, from search and NDA to letter of intent, due diligence, financing and closing, and what speeds each one up.
- What questions should I ask a seller before I make an offer?Ask why they are selling, what they do each week, how the numbers tie to the tax returns, what the lease says, and what will need money soon. Twelve questions in plain words, and what each answer tells you.
Financing
- How does an SBA loan work when you buy a business?SBA 7(a) loans go up to $5 million, run up to 10 years for the business and up to 25 for real estate, and need at least 10% of the project from the buyer. What lenders check and how to prepare.
- What is seller financing, and why does it help a buyer?In seller financing the owner lets you pay part of the price over time. It lowers the cash you bring to closing, keeps the seller invested in your success, and can sit beside an SBA loan. How it works and what to watch.
- I have $100,000. What size business can I buy?With an SBA loan, $100,000 in cash can support a purchase in the high six figures, but the business's cash flow usually sets the real limit. The math, the cash flow test, and how to find your number.
Buy by type
- How to buy a laundromatBuying a laundromat comes down to the lease, the machines and the water bills. How to check revenue a cash business cannot hide, what equipment age means for your budget, and how buyers finance it.
- How to buy a gas stationBuying a gas station means checking the fuel supply contract, the underground tanks and environmental record, and inside store sales, where most of the margin usually is. Steps, documents and financing.
- How to buy a hotel or motelBuying a hotel means checking occupancy and average daily rate by month, franchise transfer terms and any property improvement plan, and the real cost of keeping the building up. Steps and financing.
- How to buy a car washBuying a car wash means checking car counts and membership numbers, the age of the tunnel or in bay equipment, water and chemical costs, and the land. What to ask and how buyers finance it.
Selling a business
Exit
- Tired of running your business? Five ways out, and what each one paysBurned out on your laundromat, gas station, motel or car wash? Compare five exits: sell through a broker, sell direct, sell to staff or family, hire a manager, or lease it out.
- How to sell a business fast without giving it awayThe things that actually shorten a business sale: clean records ready on day one, a realistic price, buyers who can close with cash, a lease the lender will accept, and a private process.
- I want to retire. How do I sell my small business?Retiring owners get the best price by starting a year or more ahead: clean books, a lease a buyer can take over, a plan for training, and quiet marketing to qualified buyers. Steps and timing.
Process
- When should I tell my employees I am selling the business?Most owners wait until the deal is close, often after due diligence or near closing, then tell key staff first with the buyer's plan in hand. What to say, who to tell first, and how to keep it quiet until then.
- Should I offer seller financing when I sell my business?Offering to carry part of the price can widen your buyer pool and support your price, at the cost of waiting to be paid. How a seller note works, the SBA standby rule, and how to protect yourself.
- What is a letter of intent when selling a business, and is it binding?A letter of intent sets the price, terms and timeline before lawyers draft the purchase agreement. Most of it is not binding, but exclusivity and confidentiality usually are. What to check before you sign.
- What happens in due diligence when you sell a small business?After you sign a letter of intent, the buyer and their lender check your records, lease, equipment and licenses. What they ask for, how long it takes, and how to keep the deal moving.
Value
Fees
Compare
- Should you sell to a “we buy” company or use a broker?“We buy hotels” and “we buy laundromats” firms offer speed. A broker offers competing buyers. How the two compare on price, fees, privacy and speed, and how to test a direct offer.
- Can you sell your business without a broker?Selling your business yourself saves the commission but costs time, privacy and usually buyer reach. What a for sale by owner sale involves, where it goes wrong, and a lower fee option.
Laundromats
Gas stations
Hotels
Car washes
Car wash owners
- Should you lease out your car wash instead of selling it?Leasing your car wash to an operator turns it into rent while you keep the property. How a car wash lease works, the terms to negotiate, and how it compares with selling or running it yourself.
- Touchless or friction: should you replace your old in bay automatic?How touchless and friction in bay automatics compare on cleaning, paint worries, chemicals and upkeep, the signs your old machine is costing you, and what to ask a supplier before you buy.