How to Buy a Small Business

Buying a small business is one of the fastest ways to build wealth, but most first-time buyers spend months searching without a clear process. This guide is built from hundreds of real buyer-seller conversations we've facilitated on Rejigg. The patterns are clear: buyers who follow a structured approach close deals. Buyers who wing it burn out.

Here's what actually works, step by step.

Define Your Acquisition Criteria First

The single most important thing you can do before searching is get clear on what you're looking for. Successful acquirers on our platform share a common trait: they know their criteria cold before they send their first introduction.

Start with four questions:

• What size? Define your range by annual revenue or SDE (seller's discretionary earnings, meaning the total financial benefit to the owner). A $500K SDE business in the $1M-$2M range is a very different buy than a $2M EBITDA business at $6M-$8M.
• What industry? You don't need industry experience to succeed, but you need a reason. Some of the best acquisitions we've seen come from buyers with transferable skills. A former operations leader at a tech company buying a plumbing business, for example, because they know how to build systems.
• What geography? Are you willing to relocate? Will you run it remotely? Many service businesses require a local owner, and that's worth knowing before you fall in love with a listing three states away.
• How will you finance it? Your budget determines your search. An SBA loan lets you buy a $2M business with roughly $200K down. Cash buyers move faster. Knowing your financing path early keeps you from wasting time on businesses you can't afford.

Write this down. Put it in a document. We've seen buyers search for 12+ months because they keep shifting criteria every time a shiny new listing shows up.

Where to Find Businesses for Sale

Most first-time buyers start on the major listing sites and stop there. That's a fine place to begin, but the best deals often come through less obvious channels.

Online marketplaces like Rejigg, BizBuySell, and others aggregate listings from sellers across the country. On Rejigg's marketplace, sellers list directly (no broker middleman), so you're seeing the actual owner's description of their business, not a broker's polished pitch.

Off-market deals are businesses that aren't publicly listed. Their owners might be open to selling but haven't taken the step of listing. These deals tend to have less competition, which means better pricing for you. Industry conferences, trade associations, and local business groups are all legitimate sourcing channels.

Brokers represent sellers and typically charge 5-10% of the sale price. You can read more about what brokers charge and whether you need one. On Rejigg, sellers list for free and connect with buyers directly, which removes that cost from the equation entirely.

Your network matters more than you think. Tell people you're looking. Accountants, attorneys, and financial advisors who serve small businesses often know who's thinking about an exit before anyone else does.

How to Evaluate a Business Quickly

You can't do deep diligence on every business you find. You need a fast filter to separate the real opportunities from the time wasters.

Here's what experienced buyers check in the first 15 minutes:

Financial snapshot. Look at three years of revenue and profit trends.

Is revenue growing, flat, or declining? A flat business at $1.5M revenue with consistent 20% margins is a totally solid acquisition. A business showing 40% growth might be exciting, but you need to understand what's driving it and whether it continues without the owner.

Owner dependency. How involved is the owner in daily operations? If the owner IS the business (all the customer relationships, all the sales, all the key decisions), that's a harder transition. Businesses with a manager or small leadership team in place trade at higher multiples for good reason.

Customer concentration. If one customer accounts for more than 25% of revenue, that's worth understanding. It could be fine (a long-term government contract, for example), or it could mean one phone call tanks the business. Learn more about what buyers actually care about when evaluating businesses.

Asking price vs. earnings. Most small businesses sell for 2-4x SDE or 3-6x EBITDA, depending on size, industry, and growth. Rejigg's free valuation calculator can give you a quick gut check on whether the asking price is in the right ballpark.

If a business passes these four filters, it's worth a deeper look.

Writing an Introduction That Gets Responses

Here's where most first-time buyers stumble. They send vague, generic messages like "I'm interested in your business, can you tell me more?" Sellers ignore these. They get dozens of them.

The introductions that get responses on Rejigg share three qualities:

They're specific about the buyer's background. "I've spent 15 years in operations management at a Fortune 500 company and I'm looking to acquire a business I can run myself" tells the seller you're serious. It takes 30 seconds to read and answers the seller's biggest question: who is this person?

They explain why this business. "Your company caught my attention because of the recurring revenue from service contracts and your geography in the Southeast" shows you've actually read the listing. Sellers can tell the difference between someone who's interested in THEIR business and someone blasting 50 messages.

They ask a smart first question. One question. Not a list of 20. Something like "Would you be open to a conversation about the business and what your ideal transition timeline looks like?" This gives the seller an easy yes.

On Rejigg, buyers go through a vetting process and sign NDAs digitally before they can contact sellers. That pre-qualification actually helps you, because it signals to the seller that you're not a tire-kicker.

What to Ask in Your First Meeting

Your first conversation with a seller is a mutual interview. They're evaluating you as much as you're evaluating them.

Start with their story. "How did you start the business?" is the best opening question in M&A. Sellers built something they care about. Letting them tell that story builds trust and gives you context that no financial statement can provide.

Understand the "why now." Ask why they're selling. The answer tells you a lot. Retirement after 25 years is different from burnout after 5. A seller who's ready for their next chapter is usually a better counterparty than one who's desperate to get out.

Ask about the team. Who are the key employees?

Would they stay through a transition? What do they earn? The people who run the business day-to-day often determine whether an acquisition succeeds or fails.

Discuss the transition. Most sellers will stay on for 3-6 months post-close to help with the transition. Some will stay longer. Understanding their willingness early prevents surprises later.

Don't ask about detailed financials in the first meeting. You'll get there. This conversation is about fit, and about whether you and the seller can work together through a process that usually takes 3-6 months.

Due Diligence Essentials

Due diligence is where you verify everything the seller has told you. Think of it as trust but verify. You're not trying to catch someone in a lie. You're trying to understand exactly what you're buying.

Financial due diligence. Request three years of tax returns, P&L statements, and balance sheets. Compare the P&L to the tax returns.

They should tell the same story. Look at monthly trends, not just annual totals. A business with $1.2M in annual revenue could have $200K months and $50K months, and that seasonality changes how you think about cash flow.

Legal due diligence. Review all contracts, leases, and licenses. Are customer contracts assignable to a new owner?

Does the lease have a change-of-ownership clause? Are there any pending lawsuits or regulatory issues? These are standard questions, and a good seller will have answers ready.

Operational due diligence. Spend time in the business if you can.

Watch how orders come in, how work gets done, what the daily rhythm looks like. Talk to managers (with the seller's permission). The goal is understanding whether the business runs on systems or on the owner's personal relationships.

On Rejigg, sellers share diligence documents through a built-in data room. You get secure access to financials, contracts, and operational details without back-and-forth email attachments. Everything stays organized in one place.

How Deal Structure Works

The purchase price is just one number in a deal. How the deal is structured often matters more than the headline price.

Asset sale vs. stock sale. Most small business acquisitions are asset sales, meaning you buy the assets of the business (equipment, inventory, customer contracts, brand name) but not the legal entity itself.

This is generally better for buyers because you don't inherit unknown liabilities. The seller usually prefers a stock sale for tax reasons, so this becomes a negotiation point.

Earnouts. A portion of the purchase price that's contingent on future performance. For example, you might pay $2M at closing plus $500K over two years if the business hits certain revenue targets. Earnouts bridge valuation gaps: when the seller thinks the business is worth $2.5M and you think it's worth $2M.

Seller financing. The seller lends you part of the purchase price, usually 10-20%. This is common and actually a good sign, because a seller who's willing to finance part of the deal is betting that the business will keep performing.

Working capital. The cash and inventory needed to run the business day-to-day. You'll negotiate a working capital target (usually based on a trailing average) and the seller delivers the business with that amount included.

Rejigg's deal dashboard lets you compare offers side by side, tracking enterprise value, earnout terms, seller financing, and timelines in one view. It takes the spreadsheet out of the equation.

How Financing Works

Most first-time buyers use some combination of SBA loans, seller financing, and personal equity. Understanding your options early shapes your entire search.

SBA 7(a) loans are the most common path for small business acquisitions between $500K and $5M. The SBA doesn't lend directly. Instead, it guarantees a portion of the loan, which makes banks willing to lend for business acquisitions. Typical terms: 10-year repayment, interest rates around prime + 2-3%, and a down payment of 10-20% of the total project cost.

You'll need a few things to qualify: relevant experience (doesn't have to be in the same industry, but you need to show transferable skills), a reasonable credit score (680+), and enough liquidity for the down payment plus some reserves.

Use Rejigg's SBA loan calculator to model monthly payments at different price points. Knowing your debt service before you make an offer prevents you from overpaying.

Seller financing is when the seller carries a note, typically 10-20% of the purchase price, paid over 2-5 years. SBA lenders actually like seeing seller financing because it means the seller has skin in the game post-close. Most deals we see on Rejigg include some seller note.

Personal equity is your cash contribution. Between SBA lending and seller financing, you might need 10-15% of the purchase price in cash. On a $2M deal, that's $200K-$300K out of pocket.

Search funds and investors. Some buyers raise capital from a small group of investors who fund the search and the acquisition. This is more common for larger deals ($3M+) and adds complexity, but it's a legitimate path if you don't have the personal equity.

Lessons from First-Time Buyers

We've watched hundreds of buyer journeys on Rejigg. The patterns from hundreds of buyer journeys are clear.

Searching without criteria. Buyers who browse without clear parameters end up looking at everything and buying nothing. They're the ones still searching 18 months later. Define your size, industry, geography, and financing before you start.

Leading with a lowball offer. Some buyers think negotiation means starting 40% below asking price.

In the small business world, that usually ends the conversation before it starts. Sellers are people who built something they're proud of. Come in with a fair offer based on real comparisons and you'll get a real conversation.

Skipping the relationship. A business acquisition takes 3-6 months from first contact to close.

That's a long time to work with someone you haven't built trust with. Sellers choose buyers they feel good about, not just the highest offer. Spend time building the relationship.

Over-relying on brokers. Brokers represent the seller's interest, not yours. They're paid on commission, so they're incentivized to close a deal, not necessarily to find you the right deal. Working directly with sellers, like you can on Rejigg through direct messaging, gives you unfiltered information and a genuine relationship.

Ignoring the transition. The deal doesn't end at closing. The first 90 days of ownership make or break an acquisition. Have a transition plan: who's training you, how long the seller stays, what happens with key employees, how you'll introduce yourself to customers.

Analysis paralysis. At some point, you have enough information to make a decision. We've seen buyers run diligence for months, asking for one more document, one more meeting, one more data point.

Meanwhile, another buyer makes an offer and closes the deal. Perfect information doesn't exist. Good enough is good enough.

Your Next Steps

Buying a small business is a big move, but the process is learnable. Start with your criteria, find businesses that match, and focus on building real relationships with sellers.

Browse businesses for sale on Rejigg and start your search with real listings from real owners. No brokers, no gatekeepers, just direct access to sellers who are ready for their next chapter.

Frequently Asked Questions

How much money do I need to buy a small business?

Most buyers need 10-20% of the purchase price as a down payment, with the rest covered by SBA loans and seller financing. For a $1M business, expect to bring $100K-$200K in personal cash plus reserves. Your total out-of-pocket depends on the deal structure and lender requirements.

How long does it take to buy a small business?

The typical timeline from first contact to closing is 3-6 months. Finding the right business can take another 3-12 months depending on how specific your criteria are. Buyers with clear acquisition criteria and pre-approved financing close faster because sellers prioritize them.

Do I need experience in the industry to buy a business?

No. Many successful acquisitions we've facilitated involve buyers from different industries. SBA lenders want to see transferable skills (management, operations, finance) rather than exact industry experience. What matters most is your ability to lead a team and run operations.

Should I hire a broker to help me buy a business?

Buyer-side brokers exist but aren't necessary for most acquisitions under $5M. You can search marketplaces like Rejigg, message sellers directly, and run your own diligence process. An M&A attorney and a good accountant are worth the investment. A buyer's broker is optional.

What is SDE and why does it matter for valuation?

SDE stands for seller's discretionary earnings. It's the total pre-tax profit plus the owner's salary, benefits, and personal expenses run through the business. Most small businesses under $2M in value are priced as a multiple of SDE, typically 2-4x. SDE tells you what you'd actually earn as the new owner.