They say you can’t have it all. But staying-at-home to raise your children doesn’t mean you have to give up on your career aspirations. If you’re a stay-at-home parent considering re-entering the workforce, you have choices. Investing in a business could be an especially rewarding way to balance your work and family life.
At the International Franchise Professionals Group (IFPG), we’re here to help aspiring entrepreneurs identify and invest in a franchise business that meets their individual needs. But before you take the leap, make sure you understand the ins and outs of buying a business. Read on to find answers to some of the most commonly asked questions about buying a business.
What Factors Should I Consider When Buying a Business?
When looking to buy a business, there are many factors to consider. Most importantly, you must make sure the business is a good fit for you.
First, consider your skills, background, and interests. Buying a business that capitalizes on your industry experience, personal background, and passions will help ensure your success. Additionally, if you’re investing with a spouse or business partner, make sure their goals and interests align with yours too.
It’s also important to determine how much time and energy you’re willing to invest in a business. Are you looking for an active role in the day-to-day operations of the business or just an overall management and oversight role? What’s the best way for you to leverage your financial resources and generate a significant return on your investment?
How Much Does it Cost to Buy a Business?
The cost of buying a business varies and is dependent on a range of factors. What is the size, scope, and complexity of the business? How long has the business been established? Is the business profitable? Is it a well-known, established brand with a loyal customer base or an up-and-coming start-up?
When you’re ready to make an offer, you should consider the asking price, any real estate associated with the business, and the market value of inventory, as well as any costs for additional personnel, equipment, and supplies. Keep in mind that the total cost to purchase the business may also include origination fees, closing costs, and legal fees.
What Types of Financing Options Are Available for Buying a Business?
Buying a business is a substantial investment and requires considerable capital. Fortunately, in addition to conventional financing options such as bank loans and other types of business credit, multiple financing options are available specifically for those looking to invest in a franchise business.
The Small Business Administration (SBA) offers two financing options for those interested in buying a business: the SBA 7(a) Loan and the SBA 504 Loan. The 7(a) loan program provides up to $5 million to franchisees and the 504 loan program offers long-term, fixed-rate loans up to $5 million.
Another option for franchisors is the Franchise Registry. The Franchise Registry provides franchisees access to multiple lenders for financing and a variety of other resources such as marketing support and business planning services.
What Are the Benefits of Buying a Business?
Buying a business can be a powerful way to jumpstart your career after time away from the workforce. By purchasing a business, you have the opportunity to start a new career and gain control over your own destiny.
Investing in a business also offers several tax advantages. The Tax Cuts and Jobs Act of 2017 has made business ownership even more attractive by allowing businesses to deduct 20% of their qualified business income from their tax returns.
Additionally, there are numerous professional rewards and a great sense of pride that comes with owning a business. From exercising creative power to reaping financial rewards, investing in a business can be a path to success.
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