Once you identify what types of work you like and where your expertise lies, decide where you are willing to live. The best business purchase for you may be in a different location; are you willing to move? Select locations conducive to the type of climate you like, the size of city or town you prefer and where there are activities you enjoy.

Now it’s time to start the search. Newspapers from the locales you choose provide information not only about businesses for sale, but the lifestyle available in the locale. Search the Internet for general information, ideas of types of businesses for sale, and about locations you think may suit you.  When searching, use terms such as “businesses for sale”, avoiding “business opportunities”. The later type search often leads to those seeking investors or “get rich” schemes. Business brokers offer a wealth of knowledge and may lighten the load of research about specific businesses in which you have an interest. Those new at searching for businesses benefit greatly from an experienced business broker.

Choosing a well run business with potential offers a significant challenge. After you locate interesting businesses, you still must valuate each business, negotiate a fair price, and secure financing.

The valuation of a business often differs depending on whether you look through the eyes of the buyer or seller. A very basic approach is to look at the profits generated by the business in the previous 5 to 10 years, analyze the profit potential for the next 5 to 10 years, subtract the amount of fair wages needed to generate that profit, subtract tax liability based on the business’ profit and then evaluate if the asking price can be paid from balance of profit within a 5 to 10 year period.

The amount of inventory on hand, collectible accounts receivables, outstanding accounts payable, the goodwill of the business, value of the business’ real estate and other property being sold with the business all factor into the actual value of the business. No exact formula exists; the evaluation process is usually rather complicated. Negotiation power comes from knowing as much as possible about the seller, the business, the number of other businesses available for purchase in the general area and the economy, particularly in the locale of the business.