Why Buy a Small Business Instead of Starting One?
Taking over an established small business offers significant advantages compared to starting a new venture. As a buyer, you immediately benefit from a proven business model, existing customer relationships, and instant revenue. Currently, many successful small business owners are seeking suitable successors for their companies – an ideal opportunity for you to start your own business with reduced risk.
Key Benefits at a Glance:
- Immediate Revenue: Earnings from day one instead of a lengthy startup phase
- Established Customer Base: Existing customer relationships instead of arduous new customer acquisition
- Proven Business Model: Tested workflows and processes
- Manageable Risk: Reliable figures instead of uncertain forecasts
- Employee Expertise: Trained staff with valuable experience
- Attractive Financing Options: Special funding programs for business acquisitions
Especially in economically challenging times, acquiring a existing business offers far greater planning security than starting from scratch. Another advantage: acquisition costs are often lower than the cumulative investments and startup losses of a new business.
What Types of Small Businesses Are Suitable for Purchase?
The range of available small businesses is impressively diverse. Depending on your personal interests, skills, and financial capacity, there are suitable options:
Popular Sectors for Business Acquisitions:
- Retail: Stores with a stable local customer base
- Gastronomy: Restaurants, cafés, or snack bars with established locations
- Craft Trades: From electrical companies to painting businesses
- Services: Service companies such as cleaning firms or home services
- Online Businesses: E-commerce companies or online shops with digital business models
- Freelance Practices: Consulting firms or specialized service providers
Particularly attractive are small businesses that are not entirely dependent on the previous owner and have a diversified customer base. Companies with potential for digitalization or expansion also offer interesting growth opportunities for new owners.
The Process: How to Find and Buy Your Small Business
The path to owning a small business involves several important steps that should be carefully planned. A strategic approach significantly increases your chances of a successful acquisition.
1. Preparation and Goal Setting
First, clearly define what type of business fits your skills and goals:
- What industry knowledge do you bring?
- How much time can you invest? (Full-time or part-time)
- What budget is available for the purchase?
- In which region are you looking?
- What company size (employees, revenue) is optimal?
These preliminary considerations help you focus your search and evaluate offers more quickly.
2. Market Research and Business Search
Use various channels to identify potential acquisition candidates:
- Business marketplaces and succession exchanges
- Specialized M&A advisors and brokers
- Industry associations and Chamber of Commerce succession platforms
- Banks and savings banks with business exchanges
- Personal networks and direct approaches
On our portal, you will find regularly updated listings of small businesses for sale. You can also create a search profile to be automatically notified of suitable new offers.
3. Professional Due Diligence
A thorough examination of a takeover candidate is crucial for long-term success. During due diligence, all relevant aspects of the business are reviewed:
- Financial Situation: Annual financial statements, liquidity, liabilities
- Legal Status: Contracts, permits, warranties
- Market Position: Customer structure, competitiveness, growth potential
- Operational Factors: Staff, processes, location quality
- Technical Equipment: Facilities, level of digitalization, investment needs
Be sure to involve specialist experts with experience in business acquisitions for this complex review. Investing in professional advice quickly pays off by avoiding risks.
4. Business Valuation and Purchase Price Determination
The valuation of a small business follows specific methods that consider the unique nature of small enterprises:
- Asset-Based Approach: Determining the tangible value of the business
- Income Approach: Valuation based on future earnings
- Multiplier Method: Industry-standard metrics as a valuation basis
- Practitioner Method: Combination of asset and income approaches
The actual purchase price results from negotiations between buyer and seller and can be influenced by factors such as the urgency of the sale or willingness to allow a longer transition period.
5. Financing and Funding
Various financing options are available for the purchase of a small business:
- Equity Capital: The higher the equity share, the better the terms
- Bank Loans: Traditional financing through your house bank
- Subsidized Loans: Special programs such as the KfW Entrepreneur Loan or ERP funding
- Seller Financing: Partial financing by the seller
- Earn-Out Models: Purchase price payment dependent on future success
A well-thought-out financing structure is crucial for the sustainable success of your acquisition. Involve financing experts early to find the optimal solution.
Success Factors for Acquiring a Small Business
Successful integration after the purchase determines the long-term success of your acquisition. Keep these important aspects in mind:
1. Design a Professional Handover
- Plan a sufficiently long transition period with the seller
- Document key processes and implicit knowledge
- Ensure personal handover of customer relationships
- Make clear agreements about the seller’s role after the handover
2. Engage and Motivate Employees
- Communicate openly and transparently with the team
- Recognize existing structures and experience
- Develop future perspectives together
- Successfully involve employees after the acquisition
3. Maintain Continuity and Promote Innovation
- Preserve the company’s proven strengths
- Identify areas with optimization potential
- Implement gradual improvements
- Use succession as a driver of innovation
4. Personal Development as an Entrepreneur
- Continuously expand your entrepreneurial skills
- Build a network with other entrepreneurs
- Take advantage of coaching and training opportunities
- Find a healthy balance between business management and private life
Frequently Asked Questions About Buying a Small Business
How Much Does a Small Business Typically Cost?
Purchase prices for small businesses vary significantly depending on the industry, profitability, and assets. Typical prices range from 2 to 5 times the annual profit or between €50,000 and €500,000. The key factor in valuation is the sustainable earnings the business can generate under new management.
What Qualifications Do I Need to Buy a Small Business?
Required qualifications depend heavily on the industry. In some sectors (e.g., crafts), formal qualifications such as a master craftsman certificate are legally required. In other industries, practical experience and basic business knowledge are sufficient. In any case, it is important that you identify with the business model and are willing to acquire any missing knowledge.
How Long Does the Purchase Process Usually Take?
From initial contact to full takeover, the process typically takes 3 to 12 months. The duration depends on several factors, including the complexity of the business, the scope of due diligence, and the willingness of both parties to negotiate. Careful examination takes time and should not be rushed.
What Are Typical Risks When Buying a Small Business?
Common risks include:
- Overvaluation of the business
- Excessive dependence on the previous owner
- Hidden liabilities or legal issues
- Outdated business models or technologies
- Underestimated competitive situation
- Mismatch with your own skills
Thorough due diligence and expert advice help minimize these risks.
Can I Run a Small Business Part-Time?
Yes, certain small businesses are suitable for part-time management, especially if reliable employees are in place or the business model does not require the owner’s constant presence. Be sure to clarify this possibility before purchase and factor in the additional management effort in your planning.
Your Path to Owning a Small Business
Buying a small business can be the ideal entry into self-employment – with less risk than starting from scratch and immediate revenue. The key to success lies in careful preparation, thorough evaluation of takeover candidates, and well-planned financing.
Whether you already have concrete ideas or are just beginning to explore – we support you at every step on your way to owning your own business. Use our expertise and network to find the small business that perfectly matches your goals and skills.
Contact us for a non-binding initial consultation and take the first step toward your entrepreneurial future. We look forward to accompanying you on this exciting journey.