How To Find Businesses For Sale Without Using a Broker or Searching Online
To give you a better chance to find a business to own, and to speed up your search, you shouldn’t only be looking for businesses for sale, you should also be looking for off-market businesses to buy as well.
To find businesses for Sale without using a broker or searching online, you should use a direct approach and contact business owners by writing letters to them. By contacting entrepreneurs directly by letter works because many business owners fear putting their business for sale with a broker.
Whilst the most obvious way to find businesses for sale is to contact business brokers and to search online websites, like Businesses for Sale Dot Com or Biz Buy Sell, this isn’t the only way, and it isn’t necessarily the best way to find a business to buy.
Where do businesses go up for sale?
This method does work, as the million-dollar business I bought was found via a broker I discovered on Business for Sale Dot Com.
But if you’ve already started to look online, and if you’ve already started dealing with business brokers, you may well have already discovered for yourself, like I did, that business brokers aren’t always easy to deal with.
In the first case, business brokers often get in the way of the sale.
I understand they need to weed-out the tyre kickers, but I found them extremely frustrating at times.
I quite often found it difficult to obtain detailed numbers about a business from them. Not to mention the difficulty I often had at the outset to arranging a meeting with the seller.
What I often found when I contacted a new broker for the first time, is that they wanted to know how I intended to finance the acquisition, before they were prepared to send financials, and before they would arrange a meeting with the owner.
In my opinion, this is a terrible question at this stage of the process, as I had no idea whether I would even want to buy the business concerned, let alone how much I’d be paying for it, to know how much finance was required.
What is a business worth and how much should you pay?
Many brokers are under the illusion that because they’ve valued the business, this is what should be paid for it. But in many cases, brokers tend to over-value businesses, which unfortunately gives the owner a false impression of its true value.
For any deal to happen, a meeting with the owner is key.
There is only so much that can be done via the broker, but you need to be face-to-face with the seller for you to get a proper understanding of their business, and to negotiate the deal directly, as face-to-face meetings is where the magic of a deal can happen.
It is in these face-to-face meetings where it’s possible to strike the deal, with for example agreeing to use seller financing.
Not all brokers properly understand seller financing, which is often about their own limiting beliefs around this type of financing, which could lead them to persuade the seller against the idea, when in fact it might be in the seller’s best interest to accept this type of deal in order to get the sale completed quickly.
Plus, not all brokers will necessarily understand the real motivation of why the business owner is selling their business. This is what you need to find out by speaking with the seller…face-to-face.
This is why in my opinion; you are more likely to find better businesses and some of the best deals by going direct to the owners. One immediate advantage of this approach is the lack of a broker to get in the way of a good deal.
But also, if you can build a good rapport with the seller, they are likely to want to sell to you without competition from any other buyers.
Look for off-market businesses to buy
By looking for businesses that are not already on the market for sale, you will speed-up your journey to becoming a business owner.
These are businesses that are owned by entrepreneurs who have decided they want to sell, but they haven’t yet engaged a business broker. Many business owners are reluctant to engage business brokers, and the reason for this I will come onto in a moment.
When I put together my business course that teaches how to buy a million-dollar business, I thought it was important to include alternative ways to find a business to buy.
Finding businesses that are not already on the market for sale is one of the alternative methods I teach.
This is achieved by writing letters directly to business owners who own businesses in the sector (or sectors) into which you want to invest.
These letters are sent to seek out business owners who want to, or NEED to sell, but who have yet to put their business up for sale.
Why a direct approach works to find businesses to buy
To give insight into why this works well, from a “business seller’s” perspective, which is from my perspective, which is from when I was going through a tough time with my own business.
And…I know I’m not alone in the way I was thinking. It’s common for businesses owners to think like I did.
It was mid-November when my business was going through an extremely tough time.
What made it tougher for me was when I received a cancer diagnosed at the same time.
The oncologist gave me months to live, if I didn’t go through chemotherapy.
I was now not only fighting for my business, I was also fighting for my life too, which was tough…really tough.
Not least, I ended up in hospital three times fighting with sepsis, and I then I got fungal pneumonia too.
And whilst it was tough, thankfully I survived.
For me, what made the fight against cancer and all that came with it more difficult (like three bouts of sepsis), was owning a business that I wanted to sell. I felt trapped.
But also, despite everything that was happening with my business, and for me going through cancer treatment, I had to put on a brave face.
If someone had written to me at this time and asked if I wanted to sell my business, I would have bitten their arm off and said yes.
You can agree seller financing
Also, if they had asked if I would accept seller financing, I would have said yes too. Just to take the problem away from me, so I could focus on getting better.
My online course on how to buy a million-dollar business also teaches how seller financing works.
In fact, because this is such a fundamental step to buying a business, I offer a free training on seller financing as well.
Back to my perspective on why writing directly to business owners works…
At the time I wanted to sell my business, I worried about putting my business on the market, for fear of my employees, and my competitors finding out I was selling.
Whether this fear was rational or not, it doesn’t matter.
What matters is that this fear is what was holding me back, and it is the same fear that many business owners have too.
And like me, they may be experiencing a major health problem (it may not be cancer, but it might be they’ve suffered a stroke or had a heart attacked), they may be going through a divorce, they may be burnt out. It doesn’t matter the reason; what matters is how they are feeling.
If they receive your letter at the right moment, especially just after they’ve already made their decision to sell, but they’ve yet to act, you may have just found your first business to buy.
That’s exciting for you, but also, think about it this way; you’ll have just made someone’s day too.
There are likely hundreds, if not thousands of business owners who want to sell or need to sell.
Business owners who want to “get-out“, for whatever their reason.
All you need do is to contact them. And voila, you might have just found yourself a business to buy.
In addition to the direct approach, there are other ways to find off-market businesses to buy, which I teach in my course, with the aim to create deal flow, so that you give yourself options and shorten your journey to becoming an entrepreneur.
Examples of businesses sold via direct approach from buyers
Let me add weight to why using this direct approach works; by using two recent examples of businesses, I was involved with. Both businesses sold because of buyers making direct contact.
The businesses concerned were not being marketed for sale, and although the buyers didn’t write letters, they did approach the owner directly.
In both cases, the owner was already considering whether they wanted to keep the businesses concerned, and deep down they did want to sell.
All it needed for the business owner to finally decide to sell their business, was to be asked the question “do you want to sell your business”. Which is what happened.
In addition, in both cases for these two businesses, the deals were mostly financed using seller finance.
In each case it wasn’t 100% seller finance, but the first business was sold for well over £1 million, where the deposit was less than 5% of the purchase price.
The second business was sold for close to £200,000, and in this case the deposit was around 5% of the purchase price.
The owner accepted seller financing because bank lending takes far too long to arrange, and banks turn easy deals into complicated deals.
Plus, it meant the seller could earn interest on the deferred payments (or seller financing) at a rate that exceeded what they could get if the money was put on deposit.
We had to get a bit creative in structuring the deals, but this is something I love to do…it’s my forte.
So, in both cases the buyers found a business that was an “off-market” business, and they purchased these business using seller financing in the UK.
How you speed up your business buying journey
So, if you want to speed up your business buying journey, I suggest you get to writing letters to those businesses you are interest in buying.
It is a numbers game, and you may need to write many letters before you receive a response.
But you never know, you may strike lucky, like the business buyers I described above who found a business on their first contact.
On a further note, and I don’t necessarily recommend this approach, the second business sale described above, was sold without using a solicitor.
I hope this helps you on your journey to finding a business to buy, and if you have any questions on this topic about buying a business, or on any other aspect about the process involved in buying a business, please drop a comment below.
And always remember; no question is a stupid question.
If you don’t know it, you don’t know it, and by having the answer to a question you have, might be all it takes to move to the very next step in your journey to buy a business.