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How to Buy a Business with No Money: Strategies and Financing Options

Most people think that when you buy an existing business, one party hands over the money and the other hands over the keys to the premises and that’s that. And in some instances that might broadly be true. However, in the majority of business acquisitions you don’t pay the full amount on day one. And for some, you don’t even need any of your own money as a down payment.

There are a number of strategies and financing options that allow entrepreneurs to buy businesses without any money upfront. Let’s dive in and take a look.

Spotting Opportunities for Zero Money Down Deals

If you are looking to buy a new business with no money, the first thing you want is an owner who is motivated to sell. That motivation might be due to a wish to retire, stress, illness – either their own or that of someone close – or something else entirely, but they should be keen to do a deal. That helps you when you propose, for example, a deal based on seller financing or having them remain as a passive partner.

It also helps if the company is unlikely to attract a good number of potential business buyers, at least some of whom might have deep pockets.

The owner of a distressed business is likely to be open to less traditional deal structures, but be sure the business is something you are confident you can handle and turn around. You’re arguably better off looking for a distressed owner!

Forming a strategic partnership with someone interested in investing in the business and sharing ownership can be a good move. Perhaps a family member would be interested in becoming a silent partner in your business venture.

A business that has valuable assets that can be leveraged to secure bank loans is a good option. Say there is high-value machinery, equipment or intellectual property in the business; that can be used as collateral for a loan that will provide, if not the full purchase price, then at least the initial consideration. Another asset to consider is the value in the debtor book. The debt must be business-to-business but it can potentially be used to raise finance.

A further option, if you have the knowledge and expertise, is to offer a service exchange. With this, you work in the business, giving your services in return for equity. This is a longer-term approach but if it fits your business model it could be worth exploring.

Owning a Business without Money

Getting Help from Business Professionals

You can’t be an expert at everything and no one would expect you to be. That’s where your deal team comes in. It will include an accountant and a lawyer, and possibly other people as needed – for example, an HR expert if you will be dealing with staff.

You might use business brokers to help you find a business, but they’re far from the only option – and if you are inexperienced, and especially if you are looking to buy a business with no money, they might not be the best route.

Setting Your Goals

Why do you want your own business?

Are you looking to secure the financial security of yourself and your family with a reliable income? Are you buying a new business as a means of quickly growing an existing business? Do you want to become a millionaire on exit?

Understanding why you are doing something and what you want to get out of it helps keep you clear and focused during the process of buying a business. Think things through and get some goals written down.

Next, think about the type of business that will allow you to achieve those goals. What must it be making? How many staff might it have? Will it have premises, a valuable customer list, tangible assets? All this helps you to refine the type of business you should be looking to buy, and pull together a business plan.

Finding the Right Business

There are many ways to find a small business to buy, and you can use the criteria you established to make sure your target fits the bill.

Websites – you can access business-for-sale websites and set up alerts based on your criteria.

Networking – everyone you know – and everyone they know – is a potential source of small business deals. Let people know you are looking.

Social media – join relevant groups on social media – LinkedIn can be especially useful – to make contact with potential sellers.

Business brokers – they have lists of businesses for sale.

Letters – get a list targeting the kinds of businesses you are interested in and write to the owners saying you are looking to buy.

Assessing the Value

After your initial conversations with business owners, it’s time to visit the businesses you are still interested in. This will give you a better idea of scale and worth and you can see for yourself any assets you might leverage for funding.

If you wish to pursue things further, look to sign heads of terms; you might also be asked to sign an NDA. That should get you access to further information including, for example, the accounts.

Inspect the financial records, tax returns and bank statements. Get a feel for how the business operates, how money flows through it, if trade is seasonal, what the optimal level of working capital is, how much it makes, what the liabilities are, what the assets are worth.

If it has, for example, £10,000 in the bank that’s great – but if it also has a £20,000 mortgage outstanding on the business premises, that changes things.

Even if you are acquiring a business at a good price, without using your own money, and putting no money down on day one, you still need to perform due diligence. That is the process that helps you confirm that the business is what you have been told it is, and firm up the valuation.

Negotiating the Deal

There are a number of fronts to negotiate on with small business owners, including price, payment schedule, what will happen with real estate, and seller involvement after the sale. Before you start, make sure you understand the seller’s reasons for selling, and what matters most to them. This can feed in to the structure of the deal.

As well as understanding what the business owners want, be clear about what you want, and what you can do when it comes to paying for the business. Pay attention to any concerns raised by the seller, and aim to provide reassurance or look for a mutually acceptable compromise.

If you as the buyer are negotiating the price down, the results of your due diligence should back up your assertions. If there is a dispute over how the business is likely to perform after it changes hands – sellers often produce optimistic cash flow forecasts, for example – then you can tie repayment of any deferred consideration to performance (known as an ‘earn-out’).

The end result should be an amicable and mutually agreeable deal.

Finalizing the Purchase

Finally, all those things that you have discussed and agreed upon with the business owners will be recorded in a document – the sale and purchase agreement. It will set out everything, such as what is being bought, what is being paid for it, and how, and the obligations incumbent on both sides. Once the document has been signed and witnessed, and the completion day obligations met by both parties, the business becomes yours.

Prior to completion, it’s prudent to put in place a plan for the aftermath. You might also want to develop a marketing strategy. You’ll have a lot to think about and deal with, so a checklist can help. Include things like telling the staff, getting to know key staff, putting out a press release, making sure the property lease is transferred, and that passwords, access codes, bank accounts and keys are handed over.

I want to give you access to my complete Business Buying Toolkit so you can discover:

Financing Options for Buying a Business

Describe each financing option for buying a business from the list below and link to recent financing options blog posts:

Not everyone has access to a traditional bank loan. Here, we take a closer look at some of the financing options available to entrepreneurs.

Owner Financing / Seller Financing

This type of deal may involve an amount of the purchase price payable on completion – the initial consideration. In some instances only a minimal sum is payable at this time, or the arrangement might even be no money down. Any payment might be funded out of cash at bank if the business is cash-rich. The deferred element of the consideration is paid back over time with the repayment coming out of cash flow, meaning the business effectively pays for itself.

Equity Partnerships

With this, two or more parties team up to fund the purchase and all benefit from the profits. If you have no money, but do have the experience to run the business, your contribution could be ‘sweat equity’. If you form any kind of partnership, always draw up a partnership agreement. You might be all in agreement at the outset but disagreements can arise and it’s important to know what will happen in such circumstances.

Venture capitalists invest in start-up and early-stage businesses to help them grow, In return for equity stakes. They might also want to be more involved.


Crowdfunding – online appeals raising money from relatively small contributions made by many people – is something we have all got used to. It is used to provide the money for creative endeavours, legal fees and more. And it can be used to raise the purchase price of a business.

Donation-based crowdfunding offers nothing in return, whereas reward-based crowdfunding results in something tangible – a product or service from a business, for example.

Grants and Government Programs

It’s possible in some cases to access grants, or government-backed small business loans. You will have to fit the criteria and possibly apply through prescribed channels and approved lenders, but it’s worth checking out what is available. Funding can be at a national, regional or local level.

Leveraging Existing Assets and Resources

These might be assets owned by the business, as already discussed, or personal assets. (An online business is unlikely to have any tangible assets.)

Personal assets might include savings or investments, property, or valuable possessions, such as art. These could be invested, sold, or used as collateral.

Creative Financing Solutions

If you need to find less conventional and more creative funding options, consider the following alternative financing methods.

Lease-to-buy – you contract with the owner of a business to run it for a period of time in exchange for regular financial payments. At the end of the agreement, you can buy the business, renegotiate the lease, or walk away.

Profit-sharing agreement – you team up with one or more other people to fund the business purchase and you all benefit from the profits.

Barter goods/services – you provide goods or your services in return for equity in the business.

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