Get Your Business Funded: Creative Methods for Getting the Money You Need

Seller Financing

Buying an existing business is usually a very good idea, for several reasons. For one, it is less risky. You can review the books of the business and get a pretty good idea as to how much money you can expect to make. That simply is not true with a new startup. Also, there is a built-in customer base. That is great. Additionally, you do not have to spend years creating a reputation and brand; that goodwill is already something established and something you will be purchasing. Finally, you can usually get the present owner to stick around a bit and teach you the ropes, so the learning curve is less steep. All in all, buying an established business is usually a pretty smart entrepreneurial move.

That said, such businesses can be expensive and so the question arises: How do you get your purchase funded? That is where seller financing comes in. And as the story of Dan Dubinsky proves, sellers today are willing to finance at least part of the sale. That makes your job that much easier.

It's a win-win. Obviously, for you, it makes purchasing the business much easier. It also means that whatever oral promises the seller makes (to spend some time after the sale helping you learn how to run the business, for instance) must be done since the seller cannot risk angering you. Their financing is your assurance that the deal should proceed as agreed upon. But equally for sellers, the reasons are clear: By helping to finance the sale, they can get a better price and facilitate ...