How to Buy a Business with No Money: Learn the Strategies

Interest in buying a business but low on cash? Or possibly willing to take the risk of utilizing investors money to make a purchase? There are many ways owners can assume a business without paying a dollar out of their pockets. While it is difficult some owners may find success with the negotiating, financing, and proper operation of a business with no money down; shifting risk from the buyer and unlocking profits in the future.

Key Points: 

• While difficult it is not impossible to buy a business with no money down
• Utilizing financing is a great way to assume a business without paying personally 
• If you were to make a purchase there are a few tips you’ll want to follow to find long term success.

Is It Possible to Buy a Business with No Money?

Buying a business is similar at its highest level to purchasing any other good or service; something of value if being exchanged for something of value. When it comes to purchasing a business, cash isn't the only way to purchase a business. This means, while difficult, it could be possible to purchase a business with no money.

Ways to Buy a Business with No Money

Below are a few of the ways you could purchase a business without putting any money down.

• Seller Financing: Sellers may be willing to finance the purchase of a business; meaning acting as a lender. A deal may look like $0.00 but singing a note to pay the seller a fixed, or amortized amount of money each month until the sale price or terms are reached
• Business Loans: You can purchase a business using a business acquisition loan which may allow buyers to put no money down upfront but pay the bank over a period of time. For an updated list of recommended lenders, visit our article about the best business acquisition loans to consider.
• Partnership: There are scenarios where your expertise could be used as the ‘something of value’ in a transaction; brining performance to a business may be a way to buy into a business with a partner who may handle the financial aspect of a purchase
• Lease to Own: It is possible that you can start as the owner of a business as a lease arrangement, with the option to purchase the business at a future date, this may require only the money the business is generating to make a complete purchase if executed correctly. 
• Work for Equity: It may be possible to create an arrangement where your performance in a business unlocks equity as a reward, bringing yourself ownership without putting any money into the business. Many owners rely on expertise to fill gaps in their current knowledge, which can be valuable to potential sellers.
• Crowdfunding: Marketing your idea to the masses as a business and getting crowd sourced funds is another way the financial component can be handled by outside interest while the owner can manage operations, creating a no money down scenario
• Friends and Family: The most classic sense of starting a business, or making a purchase, is getting investment, but from those who trust and know you as the owner. Providing something in return its possible to acquire a business using other peoples funds this way

Reasons You May Need to Buy a Business with No Money

There are many reasons why you may want to buy a business without your own money. It is possible you do not have enough to contribute to a full purchase, or you want to explore leveraging other people's money to reduce your risk. While it may sound impossible on the surface these scenarios can exist.

Benefits of Buying a Business with No Money

When putting no money down and purchasing a business, owners will benefit from safekeeping the funds they personally own from the business. In a scenario where performance is a factor, this will allow owners to essentially sell their expertise and be compensated with ownership in a business. You may also benefit from investors providing funds, shifting risk away from the owner.

What to Look for When You’re Buying a Business with No Money

If you are purchasing a business without money up front, odds are that eventually the operation will require money. When purchasing a business in this way an owner may want to ensure there is a history of positive cash flow, to know that there may be money coming in the door down the line which can be forecasted and allocated accordingly.

Step-by-Step Guide to Buying a Business with No Money

While there is no one direct path to purchasing a business with no money, a few steps below could be utilized as a framework for what to expect

• Identify a potential business: you’ll first need to find a business that meets your needs as an owner and is willing to participate in the deal structure being proposed
• Negotiate a deal: Structure your deal with the potential seller, making it a win-win for both parties; whether performance based or investor funds be sure to outline clearly the arrangement.
• Create a detailed business plan: If you were to assume ownership of the business what is the plan to monetize and either pay obligations, investors, or debt to seller; be sure this piece is variable and assumptions are conservative. 
• Secure financing: If necessary, secure your financing; whether its from friends and family, the seller, or the bank. Having the cash needed ahead of closing the deal is crucial to ensuring things go smoothly.
• Close the deal: Be sure to follow through on the commitments or any contracts layed out in the purchase of the business. At this point you will assume ownership of the new business.

Tips for Successfully Buying a Business with No Money

Finding a business owner who would be willing to part ways with a business with less than usual terms is not impossible, but will yield difficult. The only way to find out is to ask; be willing to network, understand where sellers may be locally, or online, and have conversations about selling their businesses. It never hurts to ask.

If you are able to secure a business on your terms, be sure you’re ready to put in the work; while completing a sale will yield difficulty, the lift of the effort will continue to run the business, being sure it meets your forecasted expectations, and managing any investors.

Final Word

Exchanging something of value for something else of value is the basis of business and commerce. As assets and owners evolve, so do deal structures, which allow for opportunities for owners to purchase businesses without any money out of their own pockets. While it may feel impossible it certainly is not, and with some of the tips outlined you may find success in purchasing your next business this way