Figuring out which screen to use for your digital signage can be overwhelming. With a wide array of brands/features, it can be challenging to make a decision.
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Whether you're starting from scratch and trying to determine the cost of digital signage, or you're looking to purchase a single display for your startup or hundreds of displays for your enterprise, we have you covered. This article will provide a brief summary of some of the best options we can recommend for various settings and usage scenarios.
In , digital signage trends show a growing preference for advanced 4K and 8K screens. They offer sharper and more detailed images, making these screens ideal for creative installations and impactful advertising. The demand for these visually stunning screens is expected to rise in almost any setting, including retail, hospitality, and digital out-of-home (DooH) advertising.
As technologies becomes more affordable, businesses are increasingly choosing larger display sizes to effectively capture their audience's attention. While screens of 55 inches and smaller are still commonly used, there is a growing preference for larger displays to create a more immersive experience. However, the final decision on screen size depends on the specific requirements of the installation, including the size of the space, distance to the screen, and type of content.
While consumer TVs may not have the same level of durability and continuous operational capabilities as commercial-grade signage displays, they can still be effective in certain scenarios, which we will discuss below. For those considering this option, we recommend exploring three vendors that offer a good balance between cost and performance for digital signage purposes.
For the past few years, Hisense has become known as a manufacturer of affordable consumer TVs that offer attractive pricing and design, while maintaining an acceptable level of build quality. Although they are not made for professional digital signage settings that require 24/7 or even 16/7 operation, they can still be suitable for less demanding environments. Hisense TVs come with the Google TV operating system, which makes it easy to access the TelemetryTV digital signage software directly from the Google Play Market. Hisense's lineup includes LED and Mini-LED technologies in their ULED range, providing different levels of brightness and color accuracy.
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Hisense's affordability makes their TVs an attractive option for startups seeking internal communication solutions or dashboard TVs, as well as for local businesses looking to enhance customer engagement without a significant investment. The Class A6 and Class U6 Series, starting from only $400 for a 65-inch display, are recommended for displaying informational or educational content in settings with controlled lighting (e.g. offices, small clinics, etc.) where there is no direct sunlight.
The Quantum ULED, Class U7, and Class U8 series have a higher price starting from $800, but they are more suitable for settings where content needs to be visually appealing, such as videos and engaging images. These screens also perform well in various lighting conditions, thanks to the combination of quantum dot technology and Mini LED, offering excellent brightness for any content, even when the screen is located near a big window.
The weakest aspect of Hisense screens is their viewing angle. Although we hope this will be improved in future models, at present, we cannot recommend them for large spaces where the viewing angles of audiences may vary. In such cases, we suggest considering TCL TVs, which are priced slightly higher than Hisense.
Hisense Website
TCL, known for its consumer TVs in the mid-price range, strikes a good balance between affordability, build quality, and performance. These TVs are ideal for small to medium-sized organization seeking signage screens that don't need to be used 16/7 or 24/7, all without breaking the bank. Most of TCL's models are available with various platforms, including Android TV, Google TV, or Fire TV, which we highly recommend for compatibility with the TelemetryTV digital signage software available in both Google and Amazon's application marketplaces.
TCL offers a range of technologies, from standard LED to more advanced QLED and Mini-LED options (or a combination of both), to cater to different needs and preferences. Notably, TCL's TVs combining both QLED and Mini-LED technologies are ideal for scenarios that require high color accuracy (i.e., clothing retail) and brightness. The Mini-LED technology, in particular, provides exceptional contrast and deep blacks thanks to its localized dimming capabilities.
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For banking, healthcare, and other types of environments where viewing angles are crucial due to diverse viewing positions, TCL's CLASS 4-SERIES or S CLASS offerings with HDR LED technologies would be suitable. If these environments also require higher brightness levels due to challenging light conditions, then TCL's CLASS 5-SERIES with QLED HDR technologies will be a better option. Each of these models is priced at around $550 for a 65-inch TV screen.
For environments with even more uncontrolled light conditions, such as corporate communication dashboard TVs positioned near windows or retail screens needing vibrant colors to boost sales, the recommended options are TCL's CLASS 6-SERIES or Q CLASS offerings. These options combine advanced QLED + MINI-LED technologies. Depending on the model, a 65-inch screen will cost between $1,000 and $1,700.
However, although the brightness level of CLASS 6-SERIES or Q CLASS offerings is excellent, it may not be the preferred choice for high-end clothing or beauty space retailers that require precise color accuracy. If that's the case, continue reading for SONY's higher-tier options or professional Philips displays.
TCL Website
SONY stands out in the consumer TV market due to its high build quality and premium offerings. While SONY TVs are often associated with a higher price point, especially compared to TCL or Hisense, SONY is the only vendor from the consumer list that provides ultimate solutions with superior color accuracy, wide viewing angles, and excellent brightness all in one. This is made possible by SONY utilizing cutting-edge technologies such as QD-OLED, OLED, Mini LED, and Full Array LED, either individually or in combination. And of course, all consumer SONY TVs come with Google TV, which provides easy access to the TelemetryTV digital signage software.
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Even slight variations in shade can have a significant impact on the audience in places like luxury brand stores, beauty salons, or art galleries. These settings require not only optimal brightness and color but also perfect viewing angles. The SONY A95L model combines OLED and quantum dot technologies, offering top color accuracy and excellent viewing angles, making it ideal for such demanding environments. However, the starting price of $3,500 may be a drawback. For a more affordable option, the A80L screen with OLED technology is available for $2,200. However, it is important to note that the term "decent" is more relevant in describing the model's color brightness and accuracy.
If your setting doesn't require extremely accurate colors but still demands captivating video and images with various viewing angles under controlled lighting conditions, SONY's LED HDR models starting at $700 will meet your needs. If you encounter challenges with brightness and contrast levels rather than viewing angles, we recommend considering the X90L and X93L models, which utilize Full Array LED and Mini LED technologies respectively. These models are priced at $1,400 and $2,000.
SONY Website
There are a few key differences to consider when we start looking at commercial digital signage displays vs. consumer displays. These include decent brightness, viewing angle, suitability for 18/7 or 24/7 use, extended warranty duration, and others. However, the most important factor here is reliability and scalability. If you have a network of tens, hundreds, or thousands of screens, this will be the most crucial factor you will think of. As truck rolls related to network maintenance could be really high, you will need to minimize that and maintain screens remotely. So the pricing tiers of $2,000 - $3,000 (for a 65-inch screen) will be quickly recouped by the lower network's total cost of ownership guaranteed by professional displays. Taking these aspects into account, here are two reliable vendors of commercial digital signage displays we can recommend for .
NEC Display Solutions is a leading provider of professional-grade digital signage solutions, renowned for its innovative and high-quality displays. With a strong presence in the industry, NEC specializes in delivering cutting-edge visual technology and comprehensive digital signage solutions for various markets, including corporate, healthcare, education, and transportation. Their commitment to reliability, performance, and sustainability has made them a preferred choice for businesses looking to effectively communicate with their audience.
NEC's commitment to research and development ensures that they stay at the forefront of digital signage display technology. They offer products that seamlessly integrate into a wide range of applications and environments, and are designed to be durable (as evidenced by the full 3-year commercial warranty).
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In , NEC offers two model lines for ultra-high-definition 4K displays: ME and M. These models are designed to cater to the diverse needs of modern businesses and public spaces. The ME651 model, with a price starting at $1,565 and varying based on available features, is an excellent choice for environments that require 18/7 operation. This includes large healthcare facilities and education facilities. The more advanced M651 model, priced at $2,399, is specifically designed for demanding 24/7 operations. It is ideal for transportation hubs, airports, and manufacturing facilities. The M651 model is equipped with an industrial-strength panel and additional thermal protection to ensure durability and reliability.
If you need a display with extensive brightness for your digital signage, we suggest considering Philips displays. Some of their higher-tier models offer exceptional brightness levels.
NEC Website
PPDS, which stands for Philips Professional Display Solutions, is a specialized division that focuses on advanced commercial displays and signage solutions branded under Philips. They offer a diverse range of high-quality displays designed for various industries, incorporating the latest technological advancements. Whether it's hospitality, retail, education, or healthcare, their digital solutions enhance engagement, information dissemination, and entertainment. PPDS offers displays in different sizes and formats, including regular digital signage screens, interactive displays with touch technology, and videowall displays for immersive, ultra-high-resolution user experiences. Additionally, PPDS screens come with the Android operating system, making it easy to access the TelemetryTV digital signage software directly from the Google Play.
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The B-Line models (available from $1,100 for a 65-inch screen) boost productivity and seamlessly integrate into corporate comms. With Chromecast built-in, these displays ensure smooth presentations with wireless media sharing from Windows, Apple, and Android devices.
For powerful engagement, the Q-Line models (available from $1,400 for a 65-inch screen) are ready for anything. They are easy to set up and come in both HD and 4K Ultra HD options. These displays require no additional hardware and can be configured for almost any function.
The D-Line models (available from $1,500 for a 65-inch screen) combine performance and versatility. Ranging up to 98" in size, they are the perfect choice for content that needs to make a powerful impact. With built-in Android, these displays offer endless possibilities.
In challenging environments, the P-Line models (available for $1,900 for a 65-inch screen) outperform with heavy-duty components. Designed for 24/7 operation, they feature high-brightness outputs and are ideal for kitchen setups to engine rooms.
To stand out and make an impact in any environment, the H-Line models (starting from $4,000 for a 65-inch screen) offer ultra-high brightness of more than 2,000 nits. This ensures that content cuts through the crowd and receives the recognition it deserves. With robust components, these displays are suitable for 24/7 operation.
PPDS Website
When diving into the world of digital signage, the choice of screens is crucial but it's just the beginning. Equally important are the software solutions and media players that bring your content to life.
While some screens (especially consumer-focused ones) offer the convenience of built-in media players, creating a plug-and-play experience, professional displays often lack this feature. The all-in-one solutions typically fall short for complex signage needs or advanced applications. For those looking to deploy sophisticated content or set up multi-screen (video wall) signs, a more robust solution is necessary. This means finding a media player that not only supports multi-screen layouts but also boasts the computing power to handle demanding tasks seamlessly.
In our journey since , the TelemetryTV technical team has rigorously evaluated over 300 digital signage players across various platforms. From this extensive testing, we've distilled our findings into a list of the top 10 players for . Each selection is backed by detailed analysis of its strengths, weaknesses, and suitability for different digital signage scenarios. To guide your decision-making process, we invite you to explore our in-depth media player guide on our blog, ensuring you choose the hardware that best fits your project's unique requirements.
Read the Guide
Once you've chosen the right digital signage screens and media players, the next essential step is to find software that not only delivers power and reliability but also offers comprehensive content management and simplifies the administration of users, devices, and maintenance. This is particularly vital in large-scale operations.
While some manufacturers might provide software for managing the hardware, they often fall short in offering content management solutions. Moreover, when your setup includes devices from various manufacturers, managing them all through a single vendor-specific platform becomes impossible. The ideal approach is to adopt a platform/vendor-agnostic solution that comes with strong content management features.
This is where TelemetryTV excels. It offers support of a wide range of media players/platforms, allowing you to remotely manage your hardware fleet. You can also do the same with users, content, or even your custom enterprise-grade signage apps via TelemetryTV's PaaS features.
To experience how TelemetryTV can revolutionize your content and device management, sign up for a free 14-day trial or request a demo to see our comprehensive solution in action, tailored for managing diverse content, devices, users, and applications across various manufacturers.
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Commercial-grade screens are designed specifically for digital signage, offering a more reliable option for businesses. However, advancements in technology have made high-quality consumer-grade TVs suitable for professional setups as well. Ultimately, you should choose a display that meets your operational needs, ensuring effective content delivery and long-term durability in your specific business context.
Buying a business is a big decision &#; but when you pull the trigger on buying an existing business, you get the opportunity to become an entrepreneur without starting a small business completely from scratch. Every year, more than 500,000 businesses change hands, and that number is expected to skyrocket in the next several years as millions of baby boomers begin retiring and selling their businesses.
Buying an existing business is so popular because it lets you skip past some of the pain points and costs of starting a new business. But the journey from finding a business for sale to closing the deal can be long and complicated.
Before you begin the journey of buying a business of your own, find out everything you need to know to avoid buyer&#;s remorse. Our buying an existing business checklist will give you a step-by-step guide. We'll also cover the pros and cons of buying a business when you&#;re still just thinking about the idea, and end with how to buy a business when you're ready to close the deal and get the keys.
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Buying an existing business checklist
If you&#;re set on the idea of buying a business, then it&#;s crucial to make sure you pick the right business for you. The easiest way to set yourself up for success is buying a business that you&#;re passionate about improving and taking to the next level. But passion alone isn&#;t enough &#; experience and knowing which questions to ask when buying a business are also important when making your choice.
Here is your buying an existing business checklist:
1. Figure out what type of business you want to buy
Narrow down your passions, interests, skills and experience. You&#;ll be happier if you buy a small business that dovetails with what you already like and have some experience in.
For example, if you&#;ve been a line cook at a restaurant for several years, maybe you&#;ve decided you&#;d like to own your own restaurant. Or maybe you&#;ve been an employee for a long time at a company that&#;s now on the market. In that case, who better to buy the business than someone who knows it as intimately as you?
Although you might just want to buy a business for the financials alone &#; by its expected return on investment &#; it&#;s also important to align yourself with the business's immaterial goals. After all, the more knowledgeable and familiar you are with the business's model, products or services, customers, industry and trends, the more innovative and successful your new ideas will be.
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We&#;ll start with a brief questionnaire to better understand the unique needs of your business.
Once we uncover your personalized matches, our team will consult you on the process moving forward.
2. Search for businesses that are for sale
There are plenty of ways to find the right business for sale that fits the criteria you&#;ve decided on. These include:
Online business marketplaces such as bizbuysell.com, the largest site of its kind with more than 45,000 active listings.
Craigslist ads.
Classified newspaper ads under the &#;Businesses for Sale&#; category.
Asking people in your network of small-business owners.
Going to meetups or industry conferences to ask other business professionals.
Working with a business broker.
Business brokers legally represent the seller, so you should be careful about conveying certain information to them (such as how far you&#;re willing to go in negotiations). However, a broker can help you understand what kind of business you want, prescreen businesses to cut out all the failing companies, keep negotiations civil and smart and help you with all the necessary paperwork. Brokers do earn a commission when a sale goes through, but it&#;s typically paid by the seller.
3. Understand why an existing business is up for sale
There are plenty of reasons a business owner might put their business up for sale, including something as simple as an innocuous lifestyle choice like retirement. Or, there might be a more worrisome reason, like a fundamental problem with the business. If you&#;re about to buy a business, you&#;ll want to know exactly why the businesses you're considering are no longer working for their current owners.
You should ask the current owners what challenges they've encountered, what they&#;ve done to try solving those problems and how those attempts fared. During every conversation with the current owner, you should ask yourself, &#;Do I have what it takes to meet these challenges with different or better solutions?&#;
Be on the lookout for:
A poorly conceptualized business plan (there&#;s just not a market for the product or service).
Competitors that are far ahead.
Existing business debts.
Location problems.
A brand issue.
Inventory difficulties (the cost of production is too high, low quality is losing the business customers, storage is difficult, there&#;s no supply and demand balance, etc.).
Bad equipment (it&#;s outdated and too expensive to upgrade).
Make sure you know as much as you can about the existing business's successes, failures, challenges and future opportunities. In addition to speaking with the owner about these concerns, also talk to existing customers, existing employees, locals in the area, neighboring businesses and so on. They&#;ll give you an honest view of how the business is doing, without the bias of the seller trying to convince you to buy.
4. Narrow in on a business that aligns with your budget, goals and resources
Until now, you might have been considering several different businesses, but now it's time to hone in on the best option. The best option is the business that aligns with your budget, goals and resources.
Calculating the ideal size, location, sales, staff and so on of your prospective business is an important step in your plan of buying a business, since it will give you a scale to keep in mind when you&#;re shopping around. Figure out how much you&#;d ideally want to change a business, and assess how much that will cost you.
Money isn&#;t the only thing you&#;ll be spending. Look at the time and energy commitments you&#;re planning to invest to make the business your own. Some managers prefer to be &#;on&#; at all times, in the weeds with their employees, while others prefer to delegate and, one day, own multiple businesses.
The amount of resources you&#;ll have to invest depends in large part on the people and processes already in place and on the experience you have in the industry. For example, if you&#;re buying a tech company but lack technical expertise, you&#;ll need to invest time learning the ropes or hiring people who have the experience.
5. Do your due diligence
Due diligence is the process of gathering as much information and intel as you can before buying a business, and it is a critical step in your journey to becoming a business owner. During this period, you should work with an accountant and lawyer to make sure you have all the information you need to move forward.
As the buyer, you&#;ll want to have a good accountant on your side to review the business's financials. It's also beneficial to have a good business attorney to represent you in negotiations and to help you understand how the transaction will be structured.
Before you can begin your due diligence, the seller will most likely ask for a signed confidentiality agreement or nondisclosure agreement. By signing, you agree not to disclose any confidential information about the business that&#;s uncovered during the due diligence process. This protects the seller in case you decide buying the business is not for you after reviewing all the documents.
There are many business documents, files, agreements and statements that you&#;ll want to collect and analyze, ideally with the help of a lawyer and accountant. Here are some of the must-have documents when doing due diligence in the process of considering whether to buy a business:
Business licenses and permits
First up is to make sure that the business you&#;re looking at has all the business licenses and permits it needs. If you&#;re buying a business, you want to make sure that the current owner hasn&#;t run afoul of any local business licensing laws. Businesses in certain industries, particularly highly regulated ones like food services and childcare, need a valid permit to stay open.
Organizational paperwork and certificate of good standing
If the business you&#;re buying is a sole proprietorship or partnership, there may not be official &#;founding&#; paperwork. However, a registered business entity, such as an LLC or corporation, will have organizational documents on file with the state. For an LLC, this is the articles of organization. For a corporation, this is the articles of incorporation.
The secretary of state in your state should also be able to produce a certificate of good standing for the business you&#;re interested in buying. This certifies that the business is approved to operate in the state.
Zoning laws
Check with your area&#;s local zoning laws to make sure that you're buying a business that isn&#;t violating any restrictions. While some localities allow mixed-use commercial and residential zoning, others have tight restrictions on where businesses can be located. This especially goes for businesses like bars and nightclubs that may not be desirable in a residential area.
Environmental regulations
Has this business been secretly dumping chemicals into the nearby reservoir or violating other environmental laws? Make sure the answer is a firm no before moving forward with buying the business. Double-check that this business abides by all of the area&#;s small business environmental regulations.
Letter of intent
As you move forward with buying a business, the seller issues a letter of intent, or LOI, to the buyer when both sides have agreed on a price point and about which business assets and liabilities will be included in the transaction. The price proposal, along with the terms and conditions of the business sale, should all be included in the seller&#;s LOI.
The LOI is an indication from the seller that they are serious about seeing the deal through to the end. Once you have it in hand, you can feel more comfortable forging ahead with the remainder of due diligence.
Contracts and leases
Half the fun of the decision to buy a business is all the stuff it comes with. Whether that means a lease for the location, equipment or something else, you&#;ll want to make sure the landlord is alright with transferring over these legal documents to your name. Otherwise, you&#;ll need to negotiate a new lease, which can significantly add to your expenses.
You&#;ll also want to review any outstanding agreements that the owner has with vendors or customers. This can be very revealing. For example, if your review indicates that 90% of the business's revenue comes from a single client, you&#;ll want to think twice before buying. If that client parts ways with the business, it could put a serious dent in the business's potential.
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Business financials
Before buying a business, make sure to examine its past few years of financials, including:
Tax returns.
Balance sheets.
Cash flow statements.
Sales records and accounts receivable.
Accounts payable.
Debt disclosures.
Advertising costs.
Double-check that the tax returns and financial statements have passed an audit by a certified public accountant; don&#;t accept those financials from the sellers themselves.
Use the business's financials as an opportunity to analyze its income stream. The business you purchase doesn&#;t necessarily have to be profitable yet (particularly if it&#;s a young business), but there should be a clear path to profitability.
Be in the know on whether the business's debts and liabilities will be included in the transaction or not, and be wary of taking these on. For example, if some of the outstanding receivables the ex-owner was dealing with are too old &#; 90 days or more, for example &#; then they&#;ll be pretty tough for you to collect on. You might be better off asking the seller to insure them or contact the customers themselves.
Organizational chart
If you buy a business with employees, make sure you understand how they rank and relate to one another by asking for a business organizational chart. This should also include compensation data, management practices and processes, benefit plans, insurance and vacation policies.
Status of inventory, equipment, furniture and building
Make sure to critically analyze these aspects of the businesses, since their values will directly impact the cost of the business. You&#;ll want to check:
What&#;s on hand.
Its quality.
How sellable it is, both in terms of market viability and its condition.
How fast and for how much each type of inventory has sold in the past.
The present condition of equipment and furniture versus its original selling price.
Whether it was maintained well or needs repairs.
Whether the furniture will be useful to you or if you&#;ll need to replace it to be operational or for aesthetic reasons.
If you&#;ll need to make larger modifications to the building.
And other similar questions.
Sites like whayne.com can be used to look up equipment and obtain price estimates.
Other important documents
This list of documents will tell you a lot of information about the business, but there&#;s probably more you&#;ll want to examine. Your attorney or accountant should be able to identify additional documents specific to the business you&#;re interested in.
For example, ask the seller for property documents, equipment/asset listing, brand assets for advertising materials, an account of intellectual property assets, business insurance coverage, employee policies and contracts, incorporation information and customer lists.
Once due diligence comes to a close, you&#;ll need to make your final decision about whether buying the business is right for you. If you decide to go ahead, the sales agreement is what ties it all together.
The agreement will enumerate the final purchase price and everything you&#;re purchasing, including:
Tangible assets (inventory, equipment, furniture, building).
Intangible assets (goodwill, brand value, etc.).
Intellectual property (patents, copyrights, etc.).
Customer lists.
Have a lawyer help you put this document together or, at the very least, review it carefully before you sign.
6. Evaluate the price of the business with the earnings, assets or market approach
This is where many deals fall apart because buyers and sellers often place very different values on the same business, and several factors affect a business's value.
Buyers and sellers usually use some kind of pricing model to get a ballpark number and frame negotiations. During this process, it can be very helpful to call in an independent business valuation professional to make an objective determination of value. Valuation services, which can be found online or through word of mouth, cost around $3,000 to $5,000, but they can save you thousands more in the long run by coming up with a good estimate.
Whether you do this yourself or hire someone, it&#;s helpful to have some knowledge of different business valuation methods. To get some insight, we spoke with Mike Bilby, CPA and certified valuation analyst, at Concannon Miller.
Bilby said small businesses should understand three main approaches to valuing an existing company when they're considering how to buy a business:
Earnings approach
Best used for: buying existing businesses that are already turning a profit or have a positive forecast of earnings.
The earnings approach values a business based on its historical, current, and projected profits. Specific methods you may come across that fall into this approach include the capitalized earnings method and discounted cash flow method.
For businesses with a history of fairly stable profits, that history can be used to anticipate future earnings and value the business. Even if a business hasn&#;t generated a profit yet, earnings models can be used to predict how much the business might earn in the future. The disadvantage of the earnings approach is that it relies on a prediction of future earnings, which may not be accurate.
Assets approach
Best used for: buying capital-intensive businesses, such as manufacturing and transportation businesses, and businesses that aren&#;t profitable yet.
The assets approach measures the value of a business's tangible and intangible assets minus debts and liabilities. Tangible assets include things like equipment and real estate, and intangible assets include things like patents, trademarks and software. The assets approach considers the current fair-market value of the business's assets but also the future return on investment that the owner could get from those assets.
Market approach
Best used for: accounting for local factors or confirming a price that you arrived at based on one of the other two approaches.
The market approach measures the value of a business based on how much comparable businesses have sold for. It&#;s a good way to get a ballpark range for a business's value and to account for local factors that the other approaches may miss, such as the business's location in a particular neighborhood.
It might be confusing to get all these approaches straight in your head, but the point of all of them is to assess the current financial health of the business, as well as its growth potential. In reality, Bilby says, none of these methods exists in isolation. All three of these approaches can be used to arrive at a fair price for a business, and the final price will always be the one that both the buyer and the seller agree on.
7. Secure capital to make the purchase
Once you and seller agree on a number, the next step in buying a business is to get the money. There are a few different ways you can gather the capital you&#;ll need to purchase a business &#; some specific to buying an existing business, others pretty standard.
Here are some of the ways to finance a business acquisition:
Use personal or family money
If you&#;re able to cover the costs of buying an existing business, that&#;s always an option. This is more likely if you're buying a small business rather than a chain. Of course, you&#;ll want to consult your accountant before ponying up a large lump sum of your own cash. Also, make sure that you&#;re not using all your money buying a business because running a business takes capital, too.
Many businesses are also funded with money borrowed from family. If you go this route, you should understand the tax implications for gifts and family loans. Make sure that you and your family member put the exchange of money in writing and follow IRS rules for family loans.
Seller financing
Some sellers will agree to holding a note, or accepting staggered payments &#; sort of like a lender. This way, they get guaranteed income for the coming months (or years, depending on your plan).
There are rules around seller financing, particularly if you plan to use another form of debt financing as well. For example, sellers have to be on &#;standby&#; if you&#;re also getting an SBA loan, meaning they have to agree that they won&#;t be paid back until you pay off the SBA loan.
Some sellers might also be willing to trade in some assets, like some furniture they really loved or the company car, for a lower price.
Partner up
By turning to a partnership instead of buying a business solo, you can divide the payments you&#;ll be making while still owning that company.
Taking on a partner when buying a business isn&#;t only useful to cut costs, though: You can also bring someone on board with more specific experience or a different skill set. Just don&#;t forget to draw up a partnership agreement, so co-ownership doesn&#;t cause any problems down the line.
Sell stock to employees
By selling company stock to your employees, you can get a big discount &#; making up 50% or even 90% of the business price by some measures. You&#;ll probably want to sell non-voting stock, if possible, to retain ownership over the business. In order to issue stock, you&#;ll have to organize the business (or re-organize it) as an S corporation or C corporation.
Start by leasing the business
It might be possible for you to lease the business instead of buying it outright &#; with the option to make the big purchase down the road once you&#;re able to afford it.
Understandably, not all sellers will be open to this option, since they more likely than not want to wash their hands and walk away from the sale. However, if leasing is something you&#;d be more comfortable with &#; even though it may cost more money in the long run &#; you might as well ask.
Debt financing
Buying a business will give you tons of documents to approach a bank or alternative lender with for financing: financial histories, tax returns, employee records, cash flow analyses, inventory and equipment valuations, and much more. This wealth of data makes business acquisitions a good candidate for loans because lenders aren&#;t working with a risky blank slate.
If you&#;re looking for a small-business loan, here are a few potential financing options that might help in buying a business:
Term loan.
SBA loan.
Asset-based financing.
Getting a business acquisition loan is typically easier because the lender has a history to assess. But just like with any business loan, lenders will scrutinize all of the following:
Borrower&#;s personal credit score.
Business credit report and score.
Annual revenue.
Time in operation.
Tax returns.
Balance sheet.
Cash flow.
Outstanding debts.
For term loans and SBA loans for when you buy a business, banks typically require buyers to put down a 20% to 25% down payment on acquisition loans. However, the SBA recently made some changes that make it easier for buyers to obtain SBA 7(a) loans for buying a business. Now, the SBA requires the buyer to put down just 10%, and only half of that (5%) has to come from the buyer's own cash. The rest can come in the form of a seller's note as long as the seller agrees to be on full standby &#; meaning that the seller won't be paid back on their note until after the bank is paid.
When getting a business acquisition loan to help with buying a business, you&#;ll also have to provide a formal business valuation (like we discussed before), explain your relevant experience, offer an updated business plan, and show financial projections for the business under your command. In short, you&#;ll want to tell a story of how you'll improve the business.
8. Close the deal with the appropriate documents
The last step in our buying an existing business checklist is to close the deal.
When you&#;ve finally found the right business, done your due diligence, agreed on a fair price and gathered the capital you need, make sure you (or a broker) have all of these documents, notes and agreements in place before you officially buy a business:
Bill of sale
When buying an existing business, this document will prove the actual sale of the business, officially transferring ownership of the business's assets from the seller to you.
Adjusted purchase price
This is the final count of the cost of your purchase, including all prorated expenses&#;like rent, utilities, and inventory.
Lease
If you&#;re taking over the business's lease, make sure your future landlord is in the know. On the other hand, if you&#;re negotiating a new lease, double-check that everyone understands its terms.
Vehicle documentation
Does the business you're buying come with any vehicles? If so, you might have to transfer ownership with the local DMV &#; make sure to get the right forms completed by the time of sale.
Patents, trademarks and copyrights
Similarly, when buying an existing business, all patents, trademarks, and copyrights might require certain forms to get transferred to you, the new owner.
Franchise paperwork
Check the SBA&#;s Consumer Guide to Buying a Franchise to see if you&#;ll need to file any franchise documents.
Non-compete agreement
It&#;s standard practice &#; and generally a good idea &#; to ask for a non-compete from the former owner. This way, the previous owner won&#;t set up a competing shop right across the street.
Consultation/employment agreement
This document should be drafted in the case that the seller is staying on as an employee. Make sure to file this agreement if so.
Asset acquisition statement
The IRS Form will list the assets you&#;ve acquired, and for how much. This document is pretty important in the "buying an existing business" checklist for your tax returns, so don&#;t forget it.
Bulk sale laws
Bulk sale laws have to do with the sale of business inventory and are designed to prevent business owners from evading creditors by transferring ownership of the business to someone else. To comply, prospective buyers usually have to notify the local tax or financial authority about the pending sale.
And that's everything you need to know about how to buy a small business. But knowing how to do it is one thing, knowing why you're doing it is another. So let's talk about reasons for buying a business.
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Reasons to buy a business
Buying a business is kind of like being in the market for a home. Although some people like the history and character that comes with an older home, others don&#;t want the baggage that can saddle an older home and prefer something turnkey. Similarly, there are plenty of advantages when you buy a business that&#;s already been around for a while, but there are drawbacks, as well.
Pros of buying a business
Proven business concept
When launching a brand-new business, the bulk of your time will be spent on the planning phase. You&#;ll have to write a business plan and figure out how to turn that plan into a reality.
But when you buy a business that's already up and running, you&#;ll typically have all of this in place:
A building or office space.
Inventory and equipment.
An established brand and business brand identity (whether or not you want to change it, people know it).
Customer base.
Vendor and supplier base, plus manufacturing resources.
Existing employees who can share their knowledge and expertise.
Management processes and policies.
An understanding of your competition and market.
Granted, each of these things may not be in great condition, and the business might not be turning a profit yet. However, buying an existing business means it has some structure already in place, which will save you time upfront, letting you quickly see what you need to zero in on. Particularly if you&#;re testing a new market or entering an industry that you don&#;t have much experience in, zipping past the difficult startup phase can be a huge advantage.
Lower operating costs
One of the major benefits of buying a business is that the operating costs are lower. For example, startup costs for a brand-new restaurant can run upward of $450,000 for initial supplies, food and beverage, signage and a customized kitchen design. With an existing business, your initial operating costs are lower because &#; unless your acquisition is pretty atypical &#; many parts of the business are already in place and ready to go once you&#;re at the helm.
You don&#;t need to spend as much of your budget on hiring employees, developing marketing strategies or building a customer base because those come with the transaction. Instead, you can pour more cash into expanding the business and adapting it to your vision.
Easier to obtain financing
While the move to buy a business isn&#;t always a safe bet, lenders and investors see it as lower-risk than launching a new company. This is because there&#;s a history of financial performance that a lender or investor can use to gauge how the business has performed to date and to predict future performance. Plus, there&#;s also existing data around the company&#;s market position, competitors, brand recognition and customer base.
All this makes investors more likely to invest in the business and can make lenders more comfortable in giving you a business acquisition loan. The current owners can even participate in financing the transfer of ownership by giving you a loan.
Intellectual property is on the table
If your business-to-be has patented their products or has a copyrighted slogan or trademarked logo that wins over customers, then that intellectual property value will probably transfer over to you in the acquisition. That means when you buy a business, you sometimes buy more than what the eye can see.
This isn&#;t on the table with every business acquisition, but it could be critical if you&#;re dealing with something that you think could be expanded even more. What if you turned this small business into a national franchise? All of a sudden, that patent and copyright becomes a lot more valuable. Patents, copyrights and trademarks are often included in sales of software companies, tech businesses and creative businesses (e.g., music, design and art).
Cons of buying a business
Higher upfront purchasing costs
By buying an existing business, you&#;ll be able to save money on operating costs, such as inventory and equipment. However, you&#;ll probably face some pretty sizable purchasing costs. In fact, those purchasing costs might be greater than what it would take you to start a new business.
That&#;s because, in addition to the obvious assets, you&#;re also buying ownership over the following:
Customer base.
Built-out brand.
Design work, from logo to store interior.
Business concept and plan.
Time, effort, and money spent testing out products.
Refined processes, procedures and policies.
Income stream (if the business is already profitable).
Assets and equipment.
Intellectual property, such as copyrights, patents and trademarks.
All of these items will be the subject of negotiations between the buyer and seller and factor into the final purchase price when buying an existing business.
Unfamiliarity with the details
If you&#;re buying a business you didn't start, you&#;ll understandably be a bit less familiar with its inner workings and the details of its products, processes, employees and financials than if you built the business yourself. This could be a bit of an obstacle, especially when you&#;re just starting out. This is especially true if you are entering an industry that you lack experience in. You&#;ll need to spend a lot of time learning the ropes, and prepare for the learning curve to be steep.
Risk of a hidden problem
As a prospective business buyer, you&#;ll go through a fairly intensive due diligence process, where you&#;ll gather information about the business and the current owner. But no matter how much information you uncover, you always run the risk of taking on an issue that you&#;re not aware of or that&#;s worse than it appeared. For example, equipment could be damaged, or the brand might have a bad reputation. Once you buy a business, you buy those issues, like it or not.
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