What Are the Red Flags When Buying a Business?
By Troy Frank, Owner — Indiana Equity Brokers
Estimated read time: 7 min
The short answer: The most serious red flags when buying a business are owner dependency, customer concentration above 30% of revenue, financials that don’t reconcile to the tax returns, margins that have quietly declined for two or three years, and a seller who can’t give a straight answer about why they’re selling. None of these automatically kill a deal — every business has something. What matters is whether the seller volunteers it or you have to find it. A problem disclosed is a problem you can price. A problem discovered is usually a reason to walk.
Most buyers I meet are looking for reasons to say yes. That’s the wrong job.
By the time someone sits across from me with a signed NDA, they’ve already pictured themselves running the place. Excitement is fine. But the buyers who do well in Indiana are the ones who spend the first two weeks actively hunting for the reason not to buy. If they can’t find one, they’ve bought well. If they find one and it’s fixable, they’ve got leverage.
Over 24 years and more than 880 closed transactions, the same warning signs keep showing up. Here are the ones that actually matter — and the ones that scare buyers off for no good reason.
Red Flag 1: The Business Is the Owner
This is the one buyers underestimate most.
Ask a simple question: what happens to revenue if the seller disappears tomorrow? If the honest answer is “it drops by half,” you aren’t buying a business. You’re buying a job with a seller’s name on the customer relationships.
The tells are easy to spot once you look. The owner holds every key customer relationship personally. Pricing decisions live in their head, not in a system. There’s no second-in-command who could run a week without them. The owner works 60 hours and the business has no manager layer at all.
This doesn’t mean walk. It means structure differently. A longer transition period, a meaningful seller note, or an earnout tied to customer retention all shift risk back to the person who created it. What you don’t do is pay a full multiple for goodwill that’s about to leave the building.
Red Flag 2: Too Much Revenue From Too Few Customers
Customer concentration is the risk that shows up in every lender conversation. As a working rule, if one customer is more than 30% of revenue, treat it as a material issue. If your top three are over 50%, treat it as the central issue in the deal.
Then go one level deeper, because the percentage isn’t the whole story. Ask how long that customer has been there. Ask whether there’s a written contract or just a long habit. Ask whose relationship it actually is — the company’s, or the owner’s. A 40% customer under a three-year contract with a purchasing department is a very different risk than a 40% customer who golfs with the seller.
Lenders will ask the same questions. If concentration is heavy enough, an SBA lender may reduce what they’ll finance or decline the deal outright, which means this can end your acquisition before you ever get to negotiate.
Red Flag 3: The Numbers Don’t Reconcile
This is the flag that ends deals fastest, and it’s the easiest to test.
Line up three years of tax returns next to three years of internal profit and loss statements. They should tell the same story. When the P&L shows $600,000 of profit and the tax return shows $200,000, you need an explanation, and “we run some things through the business” is not one — at least not without documentation.
Every add-back needs a receipt. The owner’s personal vehicle, the family phone plan, the one-time legal settlement, the above-market rent paid to the owner’s own building — all legitimate adjustments, all things a buyer and a lender will want proof of. Add-backs you can document survive underwriting. Add-backs built on the seller’s word get stripped out, and the price comes down with them.
Bank statements are the tiebreaker. Deposits should track revenue. When they don’t, stop and find out why before you spend another dollar on diligence. This is exactly the kind of thing that surfaces during the due diligence weeks after an offer is accepted — and it’s much cheaper to catch it now.
Red Flag 4: A Slow, Unexplained Decline
Buyers focus hard on last year’s number. The trend matters more.
Pull five years if you can get it, three at minimum, and look at gross margin as a percentage rather than dollars. Revenue can hold flat while margin quietly erodes — that’s a business absorbing cost increases it can’t pass through, and it’s a much worse sign than a single soft year.
Watch for deferred maintenance too. Equipment nobody replaced. A truck fleet with 300,000 miles on it. Software the industry moved past four years ago. That’s real capital you’ll spend in year one, and it belongs in your valuation, not in your surprise column.
An owner who decided to sell three years ago and stopped investing leaves a very specific fingerprint. It’s usually visible in the fixed asset schedule.
Red Flag 5: The Seller Can’t Explain Why They’re Selling
Retirement, health, partner dispute, burnout, a move — all normal. Sellers who give you a clear reason and a consistent story are telling you the truth.
The concern is the vague answer. “Ready for a new challenge” from a 46-year-old with no next act tends to mean something else is coming: a lease that won’t renew, a franchise agreement expiring, a big customer that already gave notice, a regulation about to change, or a competitor moving in down the road.
Ask directly. Ask twice, at different points in the process. Then check the answer against the numbers.
What Isn’t a Red Flag
Some things scare buyers off that shouldn’t.
Messy bookkeeping is not the same as dishonest bookkeeping. A lot of good Indiana businesses are run by owners who are excellent operators and indifferent accountants. If the underlying numbers hold up when you rebuild them, disorganization is a discount opportunity, not a disqualifier.
An unglamorous industry is not a red flag either. Some of the best cash flow I’ve sold came out of businesses nobody would brag about at a dinner party.
And a seller who wants to stay involved isn’t automatically a problem. Sometimes that’s exactly what you want, as long as the terms are written down.
The real distinction is disclosure. Sellers who put their problems on the table early are usually telling you the truth about everything else. That’s the pattern I’d watch above any single metric. If you want the full framework, we’ve written a longer piece on how to evaluate a business before you buy it.
Frequently Asked Questions
What are the biggest red flags when buying a small business?
Owner dependency, customer concentration above 30% of revenue, financials that don’t reconcile to tax returns, gross margins declining over several years, and a seller who can’t clearly explain why they’re selling. Undisclosed litigation and deferred equipment maintenance round out the list.
How much customer concentration is too much when buying a business?
A single customer above 30% of revenue is a material risk, and a top three above 50% should reshape how you structure the deal. What matters as much as the percentage is whether the relationship is contracted, how long it has lasted, and whether it belongs to the company or to the departing owner.
What if the seller’s books don’t match their tax returns?
Stop and get an explanation before spending more on diligence. Legitimate add-backs — an owner’s vehicle, personal phone, one-time expenses, above-market owner rent — explain most gaps, but each one needs documentation. Undocumented add-backs get removed during lender underwriting, which lowers both the valuation and the loan amount.
Should I walk away from a business that depends heavily on the owner?
Not necessarily. Owner dependency is a structuring problem more than a disqualifier. A longer transition, a larger seller note, or an earnout tied to customer retention keeps the seller invested in the handoff. The mistake is paying a full multiple for goodwill that walks out the door at closing.
Is messy bookkeeping a reason not to buy a business?
Usually not. Many well-run small businesses have disorganized records simply because the owner is an operator, not an accountant. If the underlying numbers hold up when reconstructed against bank statements and tax returns, poor bookkeeping is often a negotiating advantage rather than a warning sign.
How do I check for red flags before making an offer?
Review three to five years of tax returns and P&Ls side by side, request a customer revenue breakdown, ask what happens to revenue without the owner, examine the fixed asset schedule for deferred maintenance, and ask the reason for selling more than once. A broker representing the listing can supply most of this before you commit to an offer.
The Buyers Who Do Best Ask Harder Questions
Every business has something. Twenty-four years in, I’ve never taken a company to market that was flawless. The buyers who do well aren’t the ones who find a perfect business — they’re the ones who find the problems early, price them accurately, and structure around them.
If you’re looking at Indiana businesses now, it costs nothing to have a conversation about what you’re seeing. You can browse our current business listings or read more about how we work with buyers.
Reach me directly at troy@indianaequitybrokers.com or visit indianaequitybrokers.com.
How Much Money Do You Need to Buy a Business?
By Troy Frank, Owner — Indiana Equity Brokers
Estimated read time: 7 min
The short answer: For most Main Street acquisitions using an SBA 7(a) loan, you need a minimum 10% equity injection of total project cost — and the SBA allows up to half of that to come from a seller note on full standby. That means a buyer with 5% in cash plus a 5% standby seller note can meet the requirement. On a $1,000,000 business, that’s roughly $50,000 of your own money, not $250,000. You’ll also need cash on top for closing costs and working capital. Collateral matters less than most buyers assume; cash flow and your equity contribution matter far more.
The most common reason someone never buys a business is a number they made up.
Buyers tell me all the time that they’re waiting until they’ve saved 20% or 25% down. That figure comes from real estate, not from business acquisition, and it keeps qualified people on the sidelines for years. The actual requirement is usually a fraction of what they think.
Here’s what it really takes to buy a business in Indiana, where the money comes from, and what lenders care about instead of your personal net worth.
The 10% Rule — and the Half of It You Don’t Have to Fund
The SBA 7(a) program is how most Main Street acquisitions get financed in Indiana. Under the SBA’s current operating procedure, a change-of-ownership deal requires a minimum equity injection of 10% of total project cost.
The part buyers miss: up to half of that 10% can come from a seller note on full standby. Full standby means the seller receives no payments at all while the SBA loan is outstanding. The note accrues, and the seller gets paid after the bank does.
So the common structure is 5% buyer cash and 5% standby seller note. On a $1,000,000 purchase, that’s about $50,000 out of your pocket rather than $100,000 — and a long way from the $250,000 most buyers assume they need.
The equity has to be yours. Lenders verify it against bank statements and they want it seasoned, typically two to three months. A large deposit that appeared last week gets flagged as undisclosed borrowed money. A HELOC or personal loan generally does not count toward the injection, though gifts from family can, with the right documentation.
What You Need Beyond the Down Payment
This is where buyers get caught short, and it’s the part nobody budgets for.
Closing costs run a few percent of the deal — attorney fees, the SBA guaranty fee, lender fees, the third-party business valuation the bank will order, lien searches, and title work if real estate is involved.
Then there’s working capital. You need payroll covered before the first receivables come in, inventory to replace what you sell in month one, and a cushion for the transition period when a customer or two takes a wait-and-see approach to the new owner. Good news: SBA 7(a) can often finance working capital as part of the same loan, so ask your lender to build it in rather than draining your personal reserves.
The buyers who struggle in year one are almost never the ones who paid too much. They’re the ones who closed with nothing left in the bank.
Why Collateral Isn’t the Gatekeeper You Think
Most buyers assume they need a paid-off house to get approved. That’s not how business acquisition lending works.
For a 7(a) acquisition, the SBA does not require a lender to decline a loan solely because collateral is insufficient. If you’re otherwise a strong borrower, a collateral shortfall alone won’t sink you. The lender will take a lien on the business assets and, if you have meaningful equity in real estate, they’ll likely take that too — but the absence of it isn’t disqualifying.
What lenders actually underwrite:
Cash flow coverage. Can the business service the new debt with margin to spare? Lenders want to see the adjusted cash flow cover the annual loan payment comfortably. This is the number that decides your deal.
Your experience. Relevant management or industry background carries real weight. You don’t need to have run this exact business, but you need a credible story about why you can operate it.
Credit and character. Personal credit, a clean background, and no defaulted federal debt.
The quality of the business itself. Stable earnings history, reasonable customer diversity, and financials that reconcile to the tax returns. A weak business won’t get financed no matter how much collateral you pledge — which is why the red flags to watch for when buying a business matter as much to your lender as they do to you.
Be prepared for one non-negotiable: you’ll personally guarantee the loan. Every owner with 20% or more of the new entity signs.
Seller Financing Does More Than Fill a Gap
Seller notes are common in Main Street deals for a reason that has nothing to do with the buyer being short on cash.
A seller willing to carry paper is telling the bank something. They believe the business will still be generating cash in three years, because that’s when they’re getting paid. Lenders read that as a confidence signal, and so should you. A seller who refuses to carry any portion of the price, on a business they’ve described as stable and growing, is worth a follow-up question.
Terms vary widely. Notes commonly run three to seven years at rates negotiated between the parties. If the note counts toward your SBA equity injection, it must be on full standby for the life of the SBA loan — no payments at all — so make sure the seller understands that going in. A seller expecting monthly checks will be unhappy to learn otherwise at closing.
What This Looks Like on a Real Deal
Take a business selling for $1,000,000 with $250,000 of adjusted cash flow.
The SBA loan covers $900,000. The equity injection is $100,000 — but $50,000 of that can be a standby seller note, leaving $50,000 in buyer cash. Add roughly $30,000 to $40,000 for closing costs and fees, and ask the lender to finance working capital inside the loan.
So a buyer walks in with something in the range of $80,000 to $90,000 rather than a quarter million. On a ten-year term, the debt service on $900,000 lands well under the $250,000 of cash flow, leaving the new owner a salary and room for the unexpected.
Every deal is different and your lender’s terms will vary. But that’s the shape of it, and it’s a very different picture than most buyers carry around. For more on the loan side specifically, see our complete guide to SBA loans for business acquisition.
Frequently Asked Questions
How much money do you need to buy a business?
With SBA 7(a) financing, the minimum equity injection is 10% of total project cost, and up to half of that can be a seller note on full standby. A buyer can often close with about 5% of the purchase price in cash, plus closing costs and a working capital reserve. On a $1,000,000 business, that’s commonly $80,000 to $90,000 rather than $250,000.
Can I buy a business with no collateral?
Often, yes. The SBA does not require a lender to decline a 7(a) acquisition loan solely because collateral is insufficient. Lenders weigh the business’s cash flow coverage, your management experience, and your credit far more heavily than your personal assets. You will still need to make the required equity injection and personally guarantee the loan.
Does a seller note count toward my SBA down payment?
Yes, up to half of the required 10% equity injection, provided the note is on full standby for the life of the SBA loan. Full standby means the seller receives no principal or interest payments until the SBA loan is repaid. Make sure the seller understands this before terms are agreed.
Can I use a personal loan or HELOC for the equity injection?
Generally no. The SBA requires the equity injection to be the buyer’s own funds, and lenders verify the source against bank statements. Funds are expected to be seasoned, usually two to three months. Documented gifts from family members can qualify, but borrowed money typically does not.
How much cash flow does a business need to get an SBA loan?
Lenders want the business’s adjusted cash flow to cover the new annual debt service with a comfortable margin, and they will re-verify the seller’s numbers independently. Add-backs you can document survive underwriting; add-backs you can’t get removed, which reduces both the approved loan amount and the price the business can support.
How long does SBA financing take when buying a business?
Plan on 60 to 120 days from letter of intent to funding for an SBA 7(a) acquisition. The lender orders an independent business valuation and re-underwrites the seller’s financials, which adds time compared with a standard working capital loan.
The Number That Actually Matters Is the Cash Flow
If you’ve been waiting to save a down payment based on a figure you got from buying a house, you’ve probably been waiting longer than you needed to. Business acquisition lending is built around whether the business can pay for itself, not around what you own.
The useful next step isn’t more saving. It’s finding out what you’d actually qualify for and what’s available in your range. Indiana Equity Brokers has closed more than $808M in transactions across 880-plus businesses, and we work with buyers at every level of the market.
Take a look at the businesses we currently have for sale or register as a buyer through our buyer program.
Reach me directly at troy@indianaequitybrokers.com or visit indianaequitybrokers.com.
What Happens After You Accept an Offer on Your Business?
By Troy Frank, Owner — Indiana Equity Brokers
Estimated read time: 7 min
The short answer: After a buyer’s offer is accepted, due diligence on a small business usually runs 30 to 60 days, and the full stretch from signed letter of intent to closing typically takes 60 to 90 days. If SBA financing is involved, plan on 60 to 120 days. During that window the buyer verifies your numbers, the lender re-underwrites the deal, the landlord assigns the lease, and attorneys paper the purchase agreement. Most deals that die after an accepted offer die here — not over price, but over something a buyer found that the seller never mentioned.
The champagne moment is the accepted offer. The hard part starts the next morning.
I’ve had sellers call me the day after signing a letter of intent asking when they get their money. The honest answer is usually two to three months. In between sits due diligence — the phase where a buyer stops believing what you told them and starts verifying it. If you want to understand what actually gets a deal to the closing table, you need to understand what happens in these weeks.
After 24 years and more than 880 closed transactions in Indiana, I can tell you the sellers who handle this phase well have one thing in common. They knew what was coming. Here is the week-by-week version.
Weeks 1–2: The Document Request Lands
Within days of an accepted offer, the buyer sends a request list. For a Main Street business it usually runs 40 to 80 line items. Three years of tax returns. Monthly P&Ls. Bank statements. Your accounts receivable aging. Customer lists. Equipment schedules. Employee census with wages. Every contract, lease, and license you hold.
Sellers are often stunned by the volume. Don’t be. A buyer putting their savings and a personal guarantee into your business is going to look at everything.
Here’s the part that matters: speed is a signal. When a seller returns a complete document package in ten days, the buyer relaxes. When documents trickle out over six weeks, the buyer starts wondering what’s being organized behind the scenes. In our experience, the deals that stall in week two rarely recover their momentum.
The fix is simple and it happens before you ever list. Assemble the package in advance. When the request arrives, you send a folder instead of starting a scavenger hunt.
Weeks 3–6: The Lender Re-Underwrites Everything
If your buyer is using an SBA 7(a) loan — and a large share of Main Street buyers in Indiana are — a second party now reviews your business. The bank does not take the buyer’s word for your numbers, and it does not take yours.
SBA acquisition loans typically run 60 to 120 days from LOI to funding. The lender orders a third-party business valuation. They confirm your tax returns match what you handed the buyer. They test whether the cash flow covers the new debt payment with room to spare.
This is where add-backs get tested. A seller can tell a buyer that the truck payment and the family cell phone plan are personal. A lender wants documentation. Add-backs you can prove survive. Add-backs you cannot prove get stripped out of the cash flow, which lowers what the bank will lend, which reopens the price conversation you thought you finished.
I’ve watched a deal lose $180,000 of value in a single underwriting call over add-backs nobody had documented. The business was fine. The paperwork wasn’t.
Weeks 5–8: Lease, Licenses, and Legal Documents
Three tracks run at once late in the process, and any one of them can set the calendar back.
The purchase agreement gets drafted, redlined, and negotiated. Attorneys argue over representations, warranties, indemnification caps, and what happens to accounts receivable at closing. Budget two to four weeks for this even when both sides are agreeable.
Licenses and permits transfer. In Indiana, a liquor permit, a contractor’s license, or a DOT authority each carries its own state timeline that no broker can accelerate.
And then there’s the landlord. If you lease your space, the buyer needs that lease assigned — and your landlord has leverage they didn’t have yesterday. Some use it. We’ve written before about how a landlord can delay or block a business sale, and it’s the item sellers underestimate most.
The Myth: Deals Die Over Price
Ask a room of business owners what kills a sale after an offer is accepted and most will say price. That’s the myth.
Here’s what I actually see. Deals die because a buyer finds something in week five that the seller knew in week one. A customer who left. A lawsuit. A key employee who already gave notice. Books that don’t reconcile to the tax return.
The problem isn’t usually the issue itself. Buyers price in known problems all the time. The problem is discovery. When a buyer finds something you didn’t disclose, they stop evaluating that item and start re-evaluating you. Once trust goes, the remaining issues stop being negotiable. That pattern is the same one behind most sales that fall apart after both sides agree.
So put the bad news on the table early. A seller who says “here’s our customer concentration, and here’s how we manage it” keeps the deal. A seller who lets the buyer’s accountant find it in week five usually doesn’t.
What Sellers Should Actually Do During These Weeks
Run your business. That sounds obvious. It isn’t what happens.
Sellers get consumed by the transaction and take their eye off operations. Then revenue softens in month two, the buyer sees a declining trend in the interim financials, and now there’s a legitimate reason to retrade the price. Your numbers stay under a microscope until the day you close.
Beyond that, three things: answer every request within 48 hours, route all buyer communication through your broker so nothing gets said twice or said wrong, and keep the sale confidential from employees and customers until closing is certain.
That last one matters more than sellers expect. Word gets out, a key employee starts job hunting, and suddenly the buyer is looking at a business with a hole in it.
Frequently Asked Questions
How long does due diligence take when selling a small business?
For most small, owner-operated businesses, due diligence runs 30 to 60 days from signed letter of intent. Clean books and fast seller responses keep it near 30. A disorganized document package can push it past 90 days.
What documents will a buyer ask for during due diligence?
Expect a request list of 40 to 80 items. The core set is three years of tax returns, monthly profit and loss statements, bank statements, accounts receivable aging, equipment lists, customer and vendor detail, employee wage data, and every contract, lease, license, and permit the business holds.
Can a buyer lower the price after due diligence starts?
Yes. A buyer can renegotiate — usually called a retrade — if diligence turns up something material, such as undocumented add-backs, declining revenue during the process, or an undisclosed liability. The most reliable defense is disclosing known issues before the offer is signed, so they’re already priced in.
How long does an SBA loan take when buying a business in Indiana?
Plan on 60 to 120 days from letter of intent to funding for an SBA 7(a) acquisition loan. The lender orders an independent business valuation and re-underwrites the seller’s financials, which adds time beyond a standard working capital loan.
What is the most common reason a business sale falls apart after an offer?
Undisclosed problems found during diligence — not price. When a buyer discovers something the seller never mentioned, trust breaks down and the rest of the deal stops being negotiable. Known problems get priced in. Discovered problems kill deals.
Should I keep running my business during due diligence?
Yes, and aggressively. Buyers and lenders review interim financials right up to closing. If performance slips while the deal is pending, you hand the buyer a reason to reduce the price or walk.
The Work That Makes This Phase Easy Happens Before You List
Due diligence is not a test you pass by being clever in the moment. It’s a test you pass with preparation you did months earlier — clean books, documented add-backs, known problems already on the table, and a document package sitting ready.
If selling is anywhere on your horizon, the most useful thing you can do this year is find out where you actually stand. Indiana Equity Brokers has closed more than $808M in transactions for Hoosier business owners, and we provide a free, no-obligation business valuation to every client. A confidential conversation costs nothing and there are no upfront fees.
Reach me directly at troy@indianaequitybrokers.com or visit indianaequitybrokers.com.
What Helps a Business Sale Actually Reach the Closing Table?
By Troy Frank, Owner — Indiana Equity Brokers
Estimated read time: 6 min
The short answer: Roughly half of business sales that enter due diligence never make it to closing. The deals that do close share four traits: the buyer and seller align on all terms early — not just price — the seller’s financials hold up under scrutiny, both sides disclose problems before due diligence finds them, and each party walks away feeling like they won. In our experience at Indiana Equity Brokers, a well-prepared Main Street deal typically closes 60–90 days after an accepted offer.
An accepted offer feels like the finish line. It isn’t. I’ve watched sellers celebrate a signed letter of intent, then spend the next three months watching the deal wobble through due diligence, financing, and lease negotiations. Some of those deals close. Many don’t. Industry data suggests 70–80% of small business sales fail somewhere between listing and closing.
After 24 years and more than 880 closed transactions in Indiana, our team has a pretty clear picture of what separates deals that close from deals that collapse. It’s rarely luck. Here’s what actually moves a sale from accepted offer to signed closing documents.
Align on Everything — Not Just Price — Before Due Diligence Starts
Most sellers focus on one number: the purchase price. But price is maybe half of what a deal actually contains. The rest lives in the details: how much cash at closing, seller financing terms, what happens to inventory and working capital, how long you’ll stay on for training, and whether the landlord will assign the lease.
Deals stall when these items get left for “later.” Later is due diligence, and the weeks a buyer spends verifying your business are the worst time to discover the buyer expected you to stay for a year when you planned on 30 days.
The strongest deals we close at IEB nail down these terms in the offer itself. A one-page LOI that only states price is a weak foundation. A detailed offer that covers transition, working capital, and financing structure gives both sides confidence — and leaves fewer surprises to surface later. We covered why this matters in why business sales fall apart after both sides agree, and the pattern holds: deals rarely die over known terms. They die over terms nobody discussed.
Clean Books Get Deals Closed
Here’s the myth: buyers walk away over price. Here’s the reality we see on the ground: buyers walk away over surprises in the numbers.
According to Axial’s 2025 Dead Deal Report, diligence findings were the single largest deal killer, accounting for about 25% of failed transactions — things like undisclosed legal issues, customer concentration, and contract problems. Price disputes rank far lower.
What this means for an Indiana seller is simple. Before you list, your financials need to tell a story a buyer’s lender can verify. Tax returns that match your P&L. Add-backs you can document. A customer list that doesn’t show 60% of revenue coming from one account without an explanation. SBA lenders fund a large share of Main Street deals in Indiana, and they will re-underwrite every number you present. If the numbers hold, financing moves. If they don’t, the deal dies quietly in a bank committee meeting.
This is also why what your business is worth and what it will actually sell for depend on documentation, not just performance.
Disclose Problems Early — Transparency Keeps Deals Alive
No business is perfect. Every company we’ve ever sold had something: a customer concentration issue, an aging piece of equipment, a key employee nearing retirement.
Known problems get priced in. Discovered problems kill trust — and trust is the real currency between an accepted offer and closing. When a buyer finds an issue the seller never mentioned, they stop wondering about that issue. They start wondering what else you didn’t mention. That’s when deals unravel.
Our approach at Indiana Equity Brokers is to surface the warts before the buyer does. It feels counterintuitive. It works. A buyer who hears “here’s the challenge, and here’s how the business manages it” stays at the table. A buyer who finds it on their own in week six usually doesn’t.
Expect 60–90 Days From Accepted Offer to Closing
Even a clean deal takes time. Financing approval, legal documents, lease assignment, license transfers, and final walkthroughs each have their own clock. In our experience, most Indiana Main Street deals close 60–90 days after the offer is accepted. Larger or more complex deals can run longer.
Sellers who understand this stay calm when the buyer’s lender asks for one more document. Sellers who expect a two-week close get frustrated, and frustration leaks into negotiations. The goal isn’t to close fast. It’s to close once, correctly, with a deal structure that protects what you actually keep.
Both Sides Have to Win
The deals that close are the ones where the seller gets fair value for decades of work and the buyer believes they bought a real opportunity. When one side squeezes the other on every point, the losing side starts looking for exits — and between LOI and closing, there are plenty of exits.
A good broker’s job is to keep the deal balanced enough that neither side wants out. That’s not softness. That’s how you get to a closing table.
Frequently Asked Questions
What percentage of business sales actually close?
Roughly half of deals that enter due diligence fail to reach closing, and about one in three signed letters of intent never closes. Across all listed businesses, industry estimates put the overall failure rate at 70–80%. Preparation before listing is the biggest factor sellers control.
How long does it take to close a business sale after an offer is accepted?
For most Main Street businesses in Indiana, expect 60–90 days from accepted offer to closing. SBA financing, lease assignments, and license transfers drive the timeline. Complex deals or real estate can extend it.
What kills most business sales during due diligence?
Surprises in the numbers. Diligence findings — undisclosed legal issues, customer concentration, financials that don’t match tax returns — were the top cause of dead deals in Axial’s 2025 report, at about 25% of failed transactions. Price disputes kill far fewer deals than sellers expect.
How can I make sure my business sale closes?
Get your books lender-ready before listing, disclose known issues early, negotiate all terms (not just price) in the offer, and set a realistic 60–90 day timeline. Working with an experienced Indiana business broker helps you avoid the mistakes that surface during due diligence.
Do I need a business broker to close a sale in Indiana?
No law requires one, but the closing rate difference is significant. A broker screens buyers for financing ability, keeps the sale confidential, manages due diligence requests, and keeps both sides moving when the deal hits friction — which nearly every deal does.
Thinking About Selling? Start Before the Offer
A closing isn’t won at the closing table. It’s won months earlier — in the quality of your books, the clarity of your terms, and the honesty of your disclosures. If a sale is anywhere on your horizon, the best time to prepare is before a buyer ever appears.
If you want to know what your business might be worth and whether it’s ready for market, a confidential conversation costs nothing. Indiana Equity Brokers has closed more than $808M in transactions for Hoosier business owners, and we provide a free, no-obligation business valuation to every client. Reach me directly at troy@indianaequitybrokers.com or visit indianaequitybrokers.com.
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Is Owning a Business Right for You?
By Troy Frank, Owner, Indiana Equity Brokers
Estimated read time: 6 min
The short answer: Owning a business is right for you if you want to control your income, you can handle uncertainty, and you’re willing to earn autonomy through responsibility. It isn’t for everyone, and that’s fine. One thing the data makes clear: buying an established business is far safer than starting one from scratch. Roughly half of new startups close within five years, while 70 to 80 percent of acquired businesses are still running, because a profitable business with a track record has already cleared the hurdle a startup hasn’t. Three honest questions will tell you quickly whether ownership fits your goals.
A reader emailed me last month. He was 47, good job, restless, and he’d been circling the same idea for two years: buy a business and run it himself. His real question wasn’t “which business?” It was “am I even the kind of person who should own one?”
That’s the right question to ask first, and most people skip it. Business ownership isn’t just a career move. It’s a trade: you give up the stability of a paycheck for control over your income and your time. For the right person that trade is worth it. For others it’s a mistake they feel within a year. Below are the three questions I walk aspiring owners through before we ever talk about listings.
1. Do you want to own your income, or just earn it?
As an employee, someone else sets the ceiling on what you make. Your role, your employer, and the pay band decide it. There’s real stability in that, and for many people it’s the right call.
As an owner, you set the ceiling yourself. Your pricing, your strategy, and how you run the operation drive what you earn. That’s the appeal, and it’s also the catch. When results are good, they’re yours. When they’re not, those are yours too. Nobody absorbs a bad quarter for you.
Here’s the part people underestimate. A business making $300,000 in owner earnings pays the owner far more than most jobs in that field ever will, but that income is tied directly to performance, especially in the first year or two. If the idea of your paycheck rising and falling with your own decisions energizes you, that’s a strong signal. If it mostly makes you anxious, that’s useful to know now, not after closing.
2. How much control do you actually want, and when?
Most people say they want more control over their time. What they picture is the finished product: the owner who sets their own schedule and answers to no one. That version is real, but it comes later.
Early ownership usually demands more of your time, not less. More decisions, more problems landing on your desk, more nights thinking about the business. The autonomy is earned through a stretch of hard, hands-on work first. Buying an established business shortens that stretch, because you inherit staff, systems, and customers instead of building them from zero, but it doesn’t erase it.
So the honest question isn’t “do I want control.” Almost everyone does. It’s “am I willing to earn that control through a couple of demanding years up front?” Owners who go in expecting freedom on day one are the ones who burn out. Owners who expect to work for it tend to get exactly the autonomy they wanted, and more of it than any job gave them.
3. Can you sit with uncertainty and own the outcome?
This is the one that sorts people. Ownership means no guaranteed paycheck, no automatic benefits, and no one else to take the blame for a hard decision. When it goes well, the reward is real. When it doesn’t, the responsibility is personal.
The owners who do well tend to share a handful of traits: they adapt, they stay curious, they plan ahead, and they can act without perfect information. It isn’t about being fearless. It’s about being able to move forward while some things are still unknown. If you need certainty before you act, ownership will be uncomfortable in a way no amount of preparation fixes.
Here’s the reassuring side, and it’s backed by numbers. Buying an existing business removes a lot of the uncertainty that sinks startups. A business that’s for sale has already proven it can generate cash, a bank has underwritten it, and due diligence surfaces the problems before you commit. That filter is why acquisitions succeed at roughly twice the rate of startups. You’re not betting on an untested idea. You’re buying a proven one.
Buying beats building for most people
If those three questions leave you leaning toward ownership, the next decision is how to get there: start something new or buy something proven. For most first-time owners, buying wins, and the data isn’t close.
Around 22 percent of new US businesses close in their first year, and roughly half are gone within five. Acquired businesses run the opposite way, with 70 to 80 percent still operating years later. The reason is simple. A startup has no customers, no cash flow, and no track record on day one. An established business hands you all three. You can read three years of real financials before you spend a dollar, which is exactly the kind of proof a new venture can’t offer. We cover this tradeoff in more depth in why buying an existing business beats starting one.
One honest caveat from the broker’s side of the table: wanting to buy and actually closing are different things. In our experience, a large share of would-be buyers, well over half, never complete a purchase. They stall on financing, cold feet, or chasing the “perfect” business that doesn’t exist. Knowing that going in helps you stay the course. If you’re weighing this seriously, our overview of how to buy a business in Indiana and actually close walks through what separates buyers who finish from those who don’t.
Frequently Asked Questions
Is owning a business right for me? Owning a business fits you if you want to control your own income, you can operate without a guaranteed paycheck, and you’re willing to earn autonomy through a demanding first year or two. It’s the wrong fit if you need certainty before you act or prefer someone else to absorb the risk. Three honest questions about income, control, and uncertainty will tell you quickly.
Is it better to buy a business or start one from scratch? For most first-time owners, buying is safer. Roughly half of startups close within five years, while 70 to 80 percent of acquired businesses are still running, because an established business already has customers, cash flow, and a financial track record you can verify before buying. Starting from scratch means proving all of that yourself.
How much money do I need to buy a business? It depends on the size of the business, but you rarely need the full price in cash. Many acquisitions use an SBA 7(a) loan, where the buyer puts down a portion and the loan covers the rest, often combined with some seller financing. A broker can tell you what down payment is realistic for the businesses that fit your goals.
What kind of person succeeds at business ownership? Successful owners tend to be adaptable, curious, and comfortable making decisions without complete information. They plan ahead and take responsibility for outcomes rather than looking for someone to blame. Being resilient matters more than being fearless, because the early years test your patience more than your nerve.
How do I know what business is right for me? Start with your goals, your budget, and the skills you actually enjoy using, then match those to businesses on the market. A broker helps translate “I think I want to own something” into concrete options, including what level of investment is realistic and which industries have real buyer demand right now.
The bottom line
These three questions won’t decide your future, but they’ll clarify what you’re really choosing between: stability with a ceiling, or ownership with responsibility. For a lot of people, that clarity is worth more than any list of businesses for sale.
If selling is even a two-to-four-year question for you, understanding what your business may be worth and what you can still improve before going to market are the first steps. A confidential conversation costs nothing and commits you to nothing. Troy Frank and the team at Indiana Equity Brokers have closed more than 880 deals for Indiana business owners since 2004, with no upfront fees and a free valuation to start. You can reach Troy at troy@indianaequitybrokers.com
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