At this stage of the business purchasing process, the potential owner of a turnkey business should have a clear plan for how he or she will procure capital for the venture. Funding a turnkey venture will depend in large part upon the size of the company.
Larger turnkey ventures typically have more readily available funding. Banks, investors, loan offices, and individual venture capitalists are all ready sources of capital for the proven business model. If the company in question has been wisely chosen, its business model is successful, and its financial statements are in order, then securing capital should be a relatively straightforward matter.
For smaller ventures, locating funding can be a more challenging process. Capital to purchase or start a small turnkey business is less than that required for a larger business, but locating that capital can be quite difficult. A small business purchase will not draw in as many potential investors, so potential entrepreneurs must either use money from personal savings or secure a personal or small business loan. For some deals, the former owner of the business will finance the cost of the business, allowing the new owner to purchase the company without turning to outside capital funds. The challenges of securing funding that face a potential small business owner are greater than those faced by a potential large business owner, and being aware of these difficulties will help potential owner-managers know what to expect when starting their small business.
During the capital funding stage of the purchasing process, the would-be entrepreneur must be prepared to procure funds based on the realities of the prospective company. Though for larger companies, this may be a comparatively simple matter, for smaller companies, it may be a challenge.
