Looking for a business to buy while you still have a job

Many people start looking for a business to buy while they still have a job, and for good reason. A paycheck covers your living costs while you search, your savings stay put for the down payment, and a steady income helps when you sit down with a lender. A search can take many months, and there's no reason to go without income for all of it.

The challenge is doing it well in the hours you have, without trouble at work. Here's how to run a search part-time.

Be honest about the hours

Before you start, decide how much time you can really give each week, and protect it. The questions to answer before you search include time for a reason: a search that only happens "when things calm down" doesn't happen.

Say you set aside 6 to 8 hours a week: two weeknight evenings for research and writing to owners, and a weekend morning for reading financials or driving around an area you're considering. That's enough for steady progress through the early stages.

The later stages are different. Owners, accountants, attorneys and lenders mostly work business hours, and a serious company will need your attention when it suits them, not you. Save vacation days for visits and due diligence (the detailed checking before you buy).

What fits around a job, and what doesn't

Stage	What it involves	When it usually happens
Deciding what you want	Industries, area, the size of company you can afford	Evenings and weekends
Finding companies and reaching owners	Research, letters, emails, follow-ups	Evenings and early mornings
First conversations and visits	Calls and meetings with owners	Early mornings, lunch breaks, some weekends
Reviewing financials	Profit and loss statements, tax returns	Evenings and weekends
Due diligence and financing	Site visits, accountant, attorney, lender	Business hours: use vacation days
Closing and handover	Signing, learning the business from the owner	Full time, after you've left your job

The early stages are where a part-time search does best. Picking an area is mostly reading and driving, which fits a weekend; see choosing where to buy. Reaching owners works well by letter, and letters can be written at night.

Keep the search private at work

Your employer doesn't need to know you're looking, and in most cases it's better that they don't until you're ready to resign. A few habits protect you:

• Read your paperwork first. Your employment agreement or handbook may include a non-compete (a promise not to work for or start a competitor) or a non-solicitation clause (a promise not to take customers or staff). It may also set confidentiality terms or rules on outside business activities. If you're looking in your employer's industry, have an attorney read them before you contact any owners.
• Use your own time and tools. No work email, work laptop, work phone or work hours for your search. It's the right thing to do, and records on company systems aren't private.
• Leave what you learned at work at work. Your employer's customer lists, pricing and plans aren't yours to take into a purchase, even informally.
• Set up a separate email address and phone number for the search, so owners and lenders can reach you without a call landing on your desk.
• Tell few people. Colleagues talk, even with the best intentions.

Be straightforward with owners

Owners will wonder whether someone with a day job is serious. Answer the question before they ask it. Tell them you're employed, what you'd do if you bought it (leave to run it full time, or keep your job for a while with a manager in place), and roughly how you'd pay for it.

Owners have their own reasons to keep things quiet. Their employees, customers and competitors don't know they might sell. Understanding discretion from your own side can help you earn their trust; see what owners worry about.

The practical part of being taken seriously is reliability. If you say you'll call Thursday at 7 a.m., call. If you need a week to read their financials, say so, and send your questions when you said you would. An owner can easily forgive limited hours. Missed promises are harder.

Your job, your income and your lender

A lender looks closely at your personal finances: your credit, your cash, your debts and how you'll cover your living costs. A steady job helps that picture. A few things keep it in good shape while you search:

• Avoid new debt. A new car loan or a big credit card balance during the search makes a lender's math harder.
• Keep your down payment money easy to trace. Lenders usually ask where your cash came from and check bank statements to confirm it. Large transfers you can't explain raise questions.
• Ask early what they'll want. Lenders differ on what they need to see about your income, your experience and your plan for the handover. Ask before you find a company, not after.
• Plan for your own costs after you leave. Price out health insurance, and decide how many months of living costs you want set aside in case the first months of ownership are tight.

When to resign

In most cases, keep your job until the deal is close to certain. That usually means due diligence is done, the purchase agreement is signed or nearly final, your loan is approved in writing, and a closing date is set. Deals can fall apart late for all kinds of reasons, and resigning too early can leave you with neither a job nor a business.

Resigning too late has costs too. You'll want time to give proper notice, to rest, and to be fully present for the handover with the owner. One approach is to time your notice so it ends a few days before closing.

Two cautions. First, ask your lender whether leaving your job before closing affects the loan, and when they want to hear about it. Second, leave well. You may need references, and in some industries a former employer can become a customer, a supplier or a competitor.

Start this week

• Put two recurring blocks on your calendar for the search, and treat them like meetings.
• Set up a separate email address and phone number.
• Read your employment agreement and handbook for non-compete, confidentiality and outside-activity terms. Note anything to ask an attorney.
• Count the vacation days you have left, and save most of them for the later stages.
• Write down the earliest date you could realistically leave, and how many months of living costs you'd want in the bank when you do.