How to Buy a Small Business: Find, Value and Close (2026)

To buy a small business, decide what you can run and afford, search listings and owners directly, value each business as a multiple of its verified cash flow, make an offer with a letter of intent, check everything in due diligence, then close with a loan, a seller note and your own cash. In BizBuySell's third-quarter 2026 data, US businesses under $1 million sold for an average of 2.3 times cash flow. Expect the search to take months.

The idea usually arrives quietly. You notice the dry cleaner that has been on the same corner for 30 years, or the plumbing firm whose vans you see everywhere, and you wonder who owns it and what it makes. Then you find out that people with ordinary jobs buy businesses like these every week, mostly with borrowed money, and that many owners are approaching retirement with no one lined up to take over.

That part is true. What the online hype skips is the work: months of searching, sellers whose numbers do not survive a bank statement, and a loan you will guarantee personally. This guide covers the whole process in order.

Why buy a business instead of starting one?

A business that already has customers, staff and a profit history removes the hardest years of a start-up. You know from the tax returns what it earned, so a lender will finance most of the price, which no bank does for an idea.

The trade is the price. You pay the seller for the years they spent building it, usually several years of profit up front, and you take on debt to do it. The hub of this series explains why that debt is both the engine and the danger.

What kind of business should you buy?

Start with three filters.

1. Something you can run. Lenders want to see relevant management experience, and you will be the one fixing problems at 7am. A good operator in a dull industry usually beats a newcomer in an exciting one.
2. Something your cash supports. An SBA acquisition loan needs at least 10% of the project cost in cash. If you have $60,000 to spare after your emergency fund, that points to a price of around $500,000 or less once fees and working capital are added. The financing guide has the details.
3. Something that pays you after the loan. Open the business acquisition calculator, put in a market salary and the loan, and see how much cash flow the business must produce before it leaves anything for you.

Businesses that suit first-time buyers tend to have many small customers, staff who already do the daily work, repeat or contracted revenue, and owners who are retiring rather than fleeing. In the IBBA and M&A Source survey for the second quarter of 2026, retirement was the main reason owners sold in every size band, peaking at 72% in the $1 million to $2 million market.

The "silver tsunami" of retiring owners is real but slower than the pitch suggests. The Census Bureau found that over half of US business owners were 55 or older in its 2019 survey. Yet brokers in BizBuySell's second-quarter 2026 report said the wave "has not materialized", with some owners winding down or passing the business to family. One called it "a trickle."

Where do businesses for sale get listed?

Brokers' fees come out of the sale price. The IBBA says commissions range from 8% to 15% for a main street business, often with a minimum. That matters to you because it is part of why sellers resist discounts, and because you will pay it yourself when you sell.

Going direct finds businesses nobody else is bidding on, and it is slow. Write to owners in your chosen industry and area, say plainly that you want to buy and run one business, and expect most not to reply.

How are small businesses valued?

Small businesses sell as a multiple of their cash flow. Under about $2 million, the cash flow measure is usually SDE (seller's discretionary earnings). The IBBA defines it as earnings before tax, interest, depreciation, one-off items and "one owner's entire compensation, including benefits and any non-business or personal expenses paid by the business". Larger businesses are priced on EBITDA, which deducts a market salary for the manager. BizBuySell notes that SDE is generally higher than EBITDA, but the multiples applied to it are typically lower.

Here are recent real multiples:

The middle of the market in the third quarter of 2026: a median sale price of $350,000, median cash flow of $156,000 and median revenue of $669,801, across 2,132 reported sales (BizBuySell). BizBuySell's figures come from deals brokers chose to report, so they describe brokered main street sales rather than every sale.

What moves a multiple up: growing revenue, many customers, staff who run the work, contracts, clean books and low owner dependence. What moves it down: one big customer, a falling trend, an owner who does everything, and a lease near its end. Pay for the business you can verify, not the one in the listing.

How do you make an offer?

1. Sign a confidentiality agreement to get the full listing package and the financials.
2. Run the first numbers. Put the asking price and the SDE into the business acquisition calculator. If the deal needs everything to go right to cover its loan, stop here.
3. Meet the owner. Ask why they are selling, what they do each week and what they would do with more money. Their answers tell you where the risk sits.
4. Send a letter of intent (LOI). It sets the price, the structure (cash, loan, seller note), the length of the exclusive diligence period, the working capital the business must come with, and the transition help you expect. It is mostly non-binding, apart from exclusivity and confidentiality.
5. Run due diligence. Our due diligence checklist goes through it in order.
6. Get the loan approved and have an attorney draft the purchase agreement.
7. Close, with the lender, seller and both attorneys.

Price is only one term. A slightly higher price with a seller note, a longer handover and a working capital commitment is often a better deal than a lower all-cash price.

How long does buying a business take?

Longer than most people plan for. BizBuySell says the search alone can stretch from six months to a year or two, followed by an additional 90 to 120 days to close. Professional searchers backed by investors take longer still: Stanford's 2026 study says acquiring a company typically takes around 20 months, though they buy far larger companies.

Online businesses move faster. Empire Flippers reports an average sale duration of 130 days, and Acquire.com's deals averaged 81 days on market.

Common mistakes first-time buyers make

• Paying for the seller's projections. Pay for historical, verified cash flow. SBA lenders cannot use projections to pass their debt coverage test, and neither should you.
• Treating SDE as your salary. SDE includes the owner's pay. Subtract a market wage before you judge whether the loan is affordable.
• Falling for the business before checking it. Decide your walk-away terms before the first meeting.
• Buying something you cannot run. Lenders look for relevant experience because they have seen what happens without it.
• Skipping working capital. You need cash to pay staff and suppliers in the first months, on top of the down payment.
• Spending the down payment you cannot afford to lose. The risks guide explains what a personal guarantee means if it goes wrong.

Your first 30 days of searching

Week 1. Write your criteria: industry, location, price range, and the cash you can put in without touching your emergency fund. Run the calculator to find the SDE you need.

Week 2. Set up saved searches on BizBuySell (and Flippa or Acquire.com for online businesses). Call two brokers in your area and tell them exactly what you want to buy.

Week 3. Review every listing that matches. Request packages for the best three and run each through the calculator. Contact one SBA lender that does acquisition loans and ask what it would want from you.

Week 4. Meet one owner, even if the business is not the one, to practise the questions. Write a list of 20 businesses you would contact directly.

A course is optional. Plenty of buyers close with a book, a lender, an accountant and an attorney. If you want training, published prices in October 2026 ran from $2,000 for Contrarian Thinking's Acquisition Foundations course to $12,500 for Acquisition Lab. The lender, the accountant and the attorney are the costs you cannot skip.

This is general information, not financial, legal or tax advice. Multiples and market data are from the sources and dates shown; every business is different, so have an accountant and an attorney review any deal before you sign.