How to Buy a Business With No Money
So you want to become your own boss and run your own business? You have the skills and ambition necessary but don’t have the capital needed to start up on your own. What should you do? Well, one option is buying an existing small business and running it as if it were your own. This will give you time to build up funds for expansion until such time that you can afford to move into more expensive premises or invest further in marketing, new equipment etc. It’s also an attractive proposition because you’re starting off with a client base already established so there’s less risk involved than starting from scratch which many would-be entrepreneurs find daunting. The only problem is… you don’t have any money!
Not to worry, there are now lots of different ways available for you to access finance without putting yourself (and your family) under too much pressure. Here’s a look at some of the main options that might appeal if you’re thinking about buying an existing business with no money.
Vendor Finance
Vendor finance is where the seller agrees to carry some or all of the costs associated with doing up a business premises and/or equipment. The lender makes the purchase by buying the equipment from you and then leasing it back to you for a period of time. You repay instalments over a set term which consists of both principal and interest. If you can’t make repayment on time, they repossess your asset(s) using an agreement called an ‘equipment trust deed’. This is obviously more attractive than taking out a regular bank loan as usually there are lower rates at play because there’s no risk involved due to the high security possession of your assets.
Angel Investors
Angel investors are high net worth individuals who invest in new businesses with the intention of growing them into something bigger over time. They’re usually more interested in creative ideas rather than existing companies that they think they can improve upon somehow so if you’ve got an idea for something completely different, this is where you might find some potential backers. You need to be able to demonstrate the capabilities of yourself and your team before anyone will be willing to lend their support though so make sure you present your business plan in the best light possible.
Peer to Peer Lending
Peer-to-peer lending refers to the practice of engaging with other people in order to borrow money without using a bank or other financial institution as an intermediary. The platform you use may specialize in business loans so it’s worth doing some research if this is what you’re after. Sites like Lending Club or Funding Circle are good places start looking for this kind of finance. It’s also possible to get more than one P2P lender involved which will give you a wider choice but be aware that they might have slightly different requirements when it comes to sanctions, interest etc. You should therefore compare the terms offered very carefully before deciding whom to borrow from.
Borrowing From Family & Friends
This is the cheapest form of finance available if you’ve got a loved one willing to make a loan to you without interest. It’s also much easier because you don’t have to go through all the usual red tape in order to get sanctioned. You should still make sure your agreement with them is in writing though and that they’re clear about when repayment will be made by, how much etc. If they’re not happy waiting forever for their money back then it might be better for everyone involved if you try crowdfunding instead.
Crowdfunding
Crowdfunding has become quite popular recently thanks primarily to sites like GoFundMe which makes it possible for people in need of help to reach out directly to members of the public who have an interest in whatever it is that they’re fundraising for. In the case of borrowing, this would be for a business loan and if you can get enough people on board that are willing to lend money, then you’ll have enough cash to make your plans happen. You’ll need to approach them with a convincing story though because if they think there’s any chance you won’t pay back the cash, then nobody will want to invest in your idea.
