How to Buy a Business: A Step-by-Step Guide for 2026

Step 1: Decide what kind of business you want

Before browsing listings, get specific about what you're looking for. Consider your budget, your skills, how involved you want to be (owner-operator vs. absentee), and the industry. A hands-on operator might want a local service business or a laundromat, while someone who wants location independence might prefer an online business like an ecommerce store or content site. Define a target range for purchase price, annual cash flow (often expressed as SDE — seller's discretionary earnings), and location.

Step 2: Find businesses for sale

There are two main channels. Online marketplaces are the easiest place to start: Flippa and Empire Flippers specialize in digital businesses, while BizBuySell is the largest marketplace for Main Street and local businesses. The second channel is off-market deals — reaching out directly to owners, working with business brokers, or networking in your industry. Off-market deals face less competition but take more legwork.

Step 3: Understand valuation basics

Most small businesses are priced as a multiple of earnings. Main Street businesses often sell for roughly 2x–4x SDE, while larger or faster-growing companies command higher multiples based on EBITDA. Online businesses are frequently priced on a multiple of monthly net profit (commonly 30x–45x monthly profit, i.e. 2.5x–3.75x annual). The right multiple depends on growth, customer concentration, owner dependence, and how durable the revenue is. Always separate the value of the business from the value of any real estate or equipment included. For the full method — recasting the financials, choosing a multiple, and a free calculator — see our business valuation guide.

Step 4: Line up financing

You have several tools, and most deals combine them:

• SBA 7(a) loans — the most common path for buying an established business in the U.S. They can finance a large share of the purchase price, with longer terms (often up to 10 years for a business, longer when real estate is involved) and competitive rates. You'll typically need a down payment (commonly around 10%), a solid credit profile, and a business with provable cash flow. For the full walkthrough — equity injection rules, standby seller notes, what underwriters check, and the realistic closing timeline — see how to buy a business with an SBA loan.
• Seller financing — the seller acts as a lender, letting you pay part of the price over time. Roughly 60% of small-business sales involve some seller financing. It signals the seller believes in the business and reduces the cash you need at closing. If your own cash is the constraint, see how to buy a business with no money down.
• Conventional bank loans — possible for businesses with strong assets or collateral, though banks are often more conservative than SBA lenders for goodwill-heavy deals.
• Buyer cash / investors — your own capital for the down payment, sometimes supplemented by partners or a search-fund structure.

Step 5: Run due diligence

Due diligence is where you verify that the business is what the seller claims. At minimum, review three years of tax returns and financial statements, bank statements, customer and supplier contracts, the lease, employee agreements, and any outstanding debts or liens. Confirm that revenue isn't dangerously concentrated in one or two customers, that the owner's role can be transferred, and that licenses and permits are current. For online businesses, verify traffic analytics, ad accounts, and revenue dashboards directly — don't rely on screenshots. It's worth paying an accountant and an attorney during this phase; their fees are small relative to the cost of a bad deal.

Step 6: Make an offer and close

Offers usually start with a non-binding letter of intent (LOI) outlining price, structure, and terms. Most small-business sales are structured as asset purchases (you buy the assets and goodwill, not the legal entity) rather than stock purchases, which limits your exposure to the seller's past liabilities. Your attorney drafts the purchase agreement, you finalize financing, funds go into escrow, and you close. Plan for a transition period where the seller trains you — often 30–90 days, and longer if seller financing is involved.

Common first-time buyer mistakes

• Overpaying because the business "feels" good without verifying the numbers.
• Ignoring owner dependence — if the business runs entirely on the seller's relationships, it may not survive the handoff.
• Skipping the lease review on a location-dependent business.
• Underestimating working capital needs after closing.

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