How to Buy a Business with No Money (11 Easy Ways that Work)

If you want to know exactly how to buy a business with no money down, this article is going to really help you.

It reveals very important details on buying a business without any money and the very easy ways that really work!

 

Is is Possible to Buy a Business with No Money Down?

Quick answer is yes!

It’s indeed possible to buy a business with no money, as you will find from reading the rest of this article.

First things first…

Signs that are inscribed with cleverly worded slogans or sayings are always fun to read.

For example, in a coffee shop, the store owner placed a sign that read, “Unattended children will be given an espresso and a free puppy.”

Or, an automobile repair shop posted on their outdoor sign, “We make friends by accident.” Also, a church sign read, “Worry is a darkroom, where negatives develop.”

One other funny sign that is often seen in a place of business states, “In God we trust. All others pay cash.”

The fundamental concept in operating a business is that a product or service is available to another individual or business.

There is a price set associated with the item or service rendered.

If customers want that item, they either pay or make other arrangements to purchase. This can be done by bartering or buying on credit.

If agreed upon by both the business and the customer the deal is struck and the item is bought, rented, or used.

Interestingly, although we may need money to buy a business’s products or services, we may not need money to buy the business.

 

Red Paperclip

If we don’t need money to buy a business, how about we purchase a home for a paperclip.

There is a story on the Internet about a jobless blogger who was sitting next to his computer one day and on a lark decided to see what he could do in trading up with a red paperclip.

In his blog posting, he said that he would like to trade the paper clip up to something bigger and eventually with this trading up process get a house or an island or house on Island.

As the story goes, he found someone who exchanged a fish-shaped pen for the paperclip.

Additional trade-ups included a doorknob, a camping stove, an empty beer keg, a snowmobile, and an afternoon with Alice Cooper.

Eventually, the transaction was made with an actor who wanted a snow globe that the blogger had obtained a kiss snow globe.

The exchange was made and the blogger God to be in a movie in a paid position.

Eventually, from the town of Kipling Saskatchewan, he received a call from someone who gave him a house as it related to his involvement with the movie part.

A paperclip for a house or no money to buy a business.

Also See: How to Start a Business to Be Self Employed and Earn 10,000 Dollars Quickly.

 

11 Ways to Buying a Business with No Money

No Money No Problem…

 

1. Fire Sale

If a business experienced a devastating circumstance within their store, often they would have what was called a fire sale.

The concept behind a fire sale was that any of the merchandise that was in the building during the time of the fire was deemed as damaged goods and therefore if a customer wanted to purchase the items they would buy the items “as is.”

In that same line of thinking, if a business is not doing well, often the owner of the business wants to get out from underneath the pressures and stress of continuing operations.

Often, a business owner who is struggling with sales will be open to hammering out a deal with a potential new owner.

Some of the details of the agreed-upon contract by both parties could be the transfer of the ownership with the new owner paying the previous owner a set amount each month.

This process could be known as a lease to buy and will be a prime example of owning a business with no money.

Another detail of this type of agreement would be the responsibility of paying property taxes and who would be responsible.

 

2. Owner Financing

If the owner of the company wants to sell their business an option for the business owner would be to take on the lending role of a financial institution.

This is a viable option if the prospective new owner has no liquidity to be qualified for a business loan, poor credit rating, or other reason for not pursuing a business loan.

Of course, a binding contract would need to be entered into by the two parties transacting in the business purchase.

Terms of the contract would include interest rate, purchase price, number of payments, and the amount of each payment, and if the contract ends up in default, what are the consequences?

 

3. Let’s Make a Deal

Another deal that can be brokered between a business owner and a potential buyer of that business is to hammer out a payment plan based on the success of the business.

This could be a win/win for both parties in that a certain amount of money is paid when a benchmark or performance milestone is reached.

This type of business purchase is often referred to as Earn-out. Some of the businesses this can work with include:

• Pet Sitting Business
• Lawn Care Business
• Transportation Business
• Painting Business
• Lash Business
• Commercial Cleaning Business
• ATM Business
• Carpet Cleaning Business
• Gift Wrapping Business

It simply means that the seller finances the business and payment by the purchaser is tied to the earnings of that business.

These payments, by agreement, can span over a number of years.

The further details of this type of business purchase include a value placed on the business. This valuation would result in a lump sum payment being agreed upon.

After the agreement is reached, payments towards this lump sum would be agreed upon in amount and frequency.

Additionally, payout amounts would be in proportion to profits realized by the company.

Consequently, if profits are high payouts are more frequent and the purchase of the business is expedited.

Of course, the reverse would be true if profits are less.

 

4. Strength in Numbers

As has been often said, there is strength in numbers.

Therefore, a plausible and powerful way of purchasing a business that has great potential is to approach other individuals who may have the resources to help support your endeavors.

It is important that the potential owner of the business has done their homework. They need to gather together the financials and past business performance of the company.

Then skillfully and confidently, need to share with potential investors as to what their plan to not only maintain profits and sales but increase them as well.

Also, a well-developed business plan needs to be shared with the potential investors that will reflect your analysis of the company and reflect your complete business understanding of the company to be purchased.

Obviously, there needs to be something in it for everybody. Therefore, the investors would want to know what will be the return on their investment dollars.

This process needs to be well thought out and realistic.

Also See: How to Buy Stripe Stock & How to Buy Hulu Stock.

 

5. Research Loan Companies

Believe it or not, there are some commercial loan companies that don’t require a down payment when an individual is thinking about buying a business.

Some of the options of these companies to ensure repayment of the loan and have some sort of collateral will often allow the lender to substitute any plan purchases of major equipment.

For example, if an individual wants to buy a restaurant and doesn’t have any money for a down payment, the lending company may take it as collateral and offer alone based on the anticipated purchase of major kitchen appliances such as a walk-in freezer, commercial stove, etc.

This could quite possibly happen because equipment bought on credit can be seized by the lender if there is a default on the loan.

Also See: How to Make Money on Upwork and Make Money as an Illustrator.

 

 

6. Unsecured Loan

When it comes to business loans, most financial companies require some sort of collateral in the event that the loan is defaulted on.

However, it is important to realize and know that there are some finance companies in which a loan can be obtained and no collateral is required.

These unsecured loans or lines of credit can range anywhere from $25,000-$150,000.

Of course, one cannot just walk in, apply for a loan and walk out with the money.

There needs to be some proof of financial security and a history of handling credit wisely.

Therefore these companies rely heavily upon credit scores and other credit history information.

Consequently, in order to receive an unsecured loan, a credit score of 690 is generally needed, along with a minimal number of credit inquiries made on a person’s credit report as well as credit utilization being below 50%

 

7. Partnerships

When that business acquisition presents itself and it perfectly matches your passion and business skills but your pockets are empty, how about taking on a partner?

The terms of the agreement can be worked out with a partner who has the financial assets and you have business acumen.

It can be a win-win for both individuals.

Obviously, the terms of the agreement need to be captured in a legal document that outlines any repayment, percentage of profits, options to buy the percentage owned by either partner, etc.

In all likelihood, the individual providing the investment money will own a greater percentage of the company.

It is also important to be clear from the on start that if a partnership agreement is arranged certain possibilities be addressed.

One such possibility or sticking point is that one partner may try to leverage the investment that they bring over the other individual as it relates to business decisions.

Also See: How to Make Money on the Road and How to Make Money as an Illustrator.

 

8. Will Work to Own

Imagine the scenario where you are working within a company that you are totally committed to and enjoy.

Perhaps, the owner is planning on retiring within five years. One day the owner approaches you as the employee and asks “how would you like to own this company?”

Well, of course, you are ecstatic and you say absolutely.

However, you quickly realize that you don’t have the financial resources to buy the company.

A solution that may present itself is if the owner would agree to sell you shares of the company in lieu of a reduced salary.

An agreement can be legally drawn up that will put a value on those shares and what it would take to be considered as the controlling owner.

The owner will be happy knowing that he or she has left this business in your capable hands and you will be happy in owning a business that you know inside and out and can take to the next level of profitability.

Also See: Money Making Business Ideas for Men.

 

9. Leverage Buyout

What about the business that you are considering buying?

Can any of the assets that will be part of the transaction be used in lieu of needed down payment money?

Well, glad you asked because this can possibly be accomplished through what is called a leveraged buyout.

As the name implies, the potential new business owner can leverage the assets of the business that they are looking to purchase.

These leveraged items or assets would be deemed as collateral to move ahead with the purchase of the company.

The only caveat to using a leveraged buyout is that one important stipulation needs to be met.

That condition is the asking price for the company must be lower than the valuation placed on the assets of that company.

This option would be challenging as common sense would ask what company owners would be willing to sell their company beneath the value of their assets.

It is rare but not beyond the realm of possibility.

Also See: How to Work at a Dispensary and Immediate Hire Work from Home Jobs.

 

10. Other Assets

Another option to buy a business when no cash is available or you don’t want to put money down, is to ask yourself what other assets do you have that may be leveraged?

Examples of other assets could include a home, a vehicle, any precious metal, unique collectibles, etc.

These items do not necessarily need to be sold or liquidated, but just as part of the purchase agreement they can be utilized as collateral to satisfy the business owner in the event that there is a breach of the contract.

 

11. Small Business Loans

There are many entities in the business world that are committed to the success of small businesses.

One such entity is the small business administration.

In their organization, they have various lending programs for small businesses.

One of those financial supporting platforms to help small business owner is through a microloan program.

Although this involves money, technically it is not your money. It is alone being granted to you towards the purchase or down payment of a small business.

There are different amounts that an individual can apply for including a maximum of $50,000 in financing.

The financing is available through the various partners that support the growth of the small business community.

As an added bonus, if approved for this financing, the new business owner can also get at no charge valuable counseling as it relates to operating a business.

 

Conclusion

The old financial axiom is that it takes money to make money.

This may not be true especially as it relates to buying a business and not having any money to start the process of purchasing.

Perhaps, rather than money, it takes a fresh perspective and thinking outside the business box to make the dream of owning a business come true.