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How do we propose an owner financing plan to a business owner?

 

An inc.com user asks:
We're a young couple, and there's a business we're interested in buying. We've secured some family loans, but we're still short $75,000. I've thought about presenting the current owner with an owner financing plan. Where do we start?

Buying a Business or Franchise mentor Tom West responds:
Without knowing whether you're short $75,000 on a purchase price of $80,000 or $500,000, it's tough to give you a straight answer. However, it has been my experience that sellers are usually willing to sit down and discuss financing options with reasonable, well-intentioned people.

My advice is to invite the owner and spouse, if possible, out to dinner. Pick a spot that's quiet and convenient. You go with your spouse and tell the seller exactly what you have in mind. It's possible that the owner is ready to retire (or otherwise pack it in) and would love to have a young, aggressive prodigy to work with him or her and eventually take over the business. Basically, you'd buy into the business and work out the balance based on your earnings, profits, etc.

Owner financing works for both parties more often than most people realize. You might also try the U.S. Small Business Administration for financing; in my opinion, the SBA is a lot more flexible now than in the past.

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