Action Steps for
Buying a Small Business
For those in the process of considering a business purchase, the ASBDC offers
the following suggested Action Steps. These steps are intended to help guide
you through the process and point you towards suggested information and tools.
Step 1: Take the ASBDC online Buying a Business Course
Participating in the Buying a Business course will provide you with a
good foundation as you proceed with purchasing an existing business.
Step 2: Consider potential funding needs and realities of obtaining financing
It is important to estimate the amount of funding that would be
needed for the project and consider funding requirements. It is recommended
that those considering buying a business review "Can I Qualify for a
Loan?" and consider the realities of obtaining financing.
Step 3: Gather Information from the Seller
Obtaining information from the seller about the business is a very
important step. This information can help in the decision making process
as well as will be required if financing is needed.
Step 4: Consider Planned Changes to the Business
It is important to consider any planned or required changes to the business.
How will the business be different under your ownership? How will these
changes affect the business? What would be the costs of such changes? A
written explanation of planned changes should be developed.
Step 5: Develop Financial Projections
Develop income statement and cash flow projections based on historical
performance, information obtained from the seller, and planned changes to the
business operation under new ownership. Developing projections can help you
determine whether or not the project is feasible and if you are still
interested in moving forward with the business purchase.
Arkansas residents - If you would like to talk with someone about the
information you've obtained from the seller and about the feasibility of your
project, the ASBDC can assist you. To obtain this assistance, contact your
local ASBDC office.
Step 6: If financing is needed, develop and submit loan proposal to a
potential lender.
Individuals planning a business acquisition who need financing should develop
a Loan Proposal to communicate with potential lenders. A Loan Proposal
provides lenders the information they need in order to decide whether or not
to finance the project.
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