More and more frequently, people are becoming entrepreneurs of necessity rather than choice. Many people possess excellent skills and qualifications along with the necessary savings to launch or buy a small business. Even so, many of them might never have dreamed of entering the small business world had they not become victims of corporate downsizing or layoffs.

Faced with fewer local employment opportunities, more people are opting to go the small business route -- in effect, buying themselves a job with their savings. Others are cashing in on their home equity loan to buy a business opportunity rather than being forced to relocate or continue on unemployment.

According to the U.S. Small Business Administration, 5 million businesses around the country now change hands every year. Before anyone takes the risk of buying or starting a small business, they should take the time to investigate it thoroughly.

It is imperative that a potential business buyer carefully thing through his motives for considering the purchase of any particular business and his criteria in selecting one. You have to ask yourself: "What am I doing? What am I really risking?" Buying a business is a lot like getting married. It is a very serious commitment.

A potential buyer of a business opportunity should consider his own experience, what he is good at and what he enjoys. Think about it before you tie the knot. It is critical that you be clear on what you want to do and where you want to go from the start.

To arrive at that decision, you must first balance the positives against the negatives. Make a list of the benefits and drawbacks, then determine which outweighs the other. When it comes to buying a business, there is little or no room for guessing or emotion.

Once you have made your decision, read through the listings in the directory section of Business Opportunities Handbook. That can help familiarize you with the many different types of business opportunities available today.

Another avenue is to contact a business broker if you are in the market for an existing business. Let it be known in the brokerage and business community that you are actively looking for a "motivated seller" or a particular type and size of business to buy.

When you locate a business opportunity that interests you, find out everything you possibly can about it. You may find out that you have to meet with the seller or business broker and build a relationship in order to open up a line of communication before you will be able to obtain much information. In the case of an existing business, you may be asked to sign a confidentiality agreement and possibly to provide credit references.

PROCEED WITH CAUTION

Once you are presented with the pertinent facts and information about the business, don't be premature in passing judgement. This is a major plunge! Try to cut through any confusing or misleading data and focus in only on the verifiable data. Check, double-check and triple-check.

It is crucial that you analyze all financial records, tax returns and any other relevant information that is available. Consider everything about the business before you make any proposals. What sets winners apart from the rest of the herd is that they go beyond the basics of business opportunity buying.

Make a list and evaluate each potential pitfall. Buying a business opportunity is a step-by-step process that requires careful consideration of the many factors involved, such as financial considerations, price, a business plan, terms, conditions, non-compete clauses, encumbrances, leases, employees, evaluation, legal, accounting and, in some cases, real estate. The analysis to reach an informed decision is often exhausting and time-consuming, but the effort will pay off in the long run.

At some point, most business purchase transactions require bringing in professional help from attorneys and accountants to pull the deal together. A good, experienced business lawyer can smooth out the bumps in the road all the way to the closing, and a good accountant can save you money. Keep in mind, however, that attorneys and accountants generally do not have operating expertise; you must make the business decisions.

Buying or starting your own business can be the beginning of a new chapter in your life. First calculate your risk, then make an informed decision, then make your move.

Before you do any of that, however, be dead serious and honest with yourself in your own self-evaluation. Know your weaknesses as well as your strengths and abilities. The final decisions you make will be all yours. If you do not succeed, you will have only yourself to blame. If you do succeed, it will be one of the most rewarding and fulfilling things you will ever do. Owning your own business can be the source of lifelong independence and total security. It can truly give you control of your own destiny.

Some people find it difficult to conduct an honest evaluation of their own aspirations and capabilities. They can find help in this aspect of the business opportunity search by contacting a career counseling service or employment center. These centers often offer testing and evaluation services that can help determine whether business ownership is likely to be a good choice for them, and even the type of business to which they might be best suited.

FINDING FINANCING

Once you have made the decisions to buy or start your own business, you have to figure out how to finance it. Some existing businesses and business opportunities offer some form of seller financing.

From a prospective buyer's standpoint, seller financing is usually very desirable. It can be a good sign that you are not just buying a "pig in a poke". In a sense, you are really buying a business and paying for it -- at least partially -- out of its own profits. In other words, the business seller lends you part of the money to buy the business. That is usually a good indication that the seller is confident you will succeed and repay him.

Many business opportunity buyers make an effort to keep the down payment as small as possible in order to retain more money for operational reserves, at least until they become comfortable that business profits will pay operating expenses and carry the business.

On the other hand, sellers often require a down payment of 50% or more, and that is often a good reason to seek out other sources of financing. That is where the help of an experienced commercial business loan officer can be crucial.

Everyday, key business executives in your community face loan committees and fail to obtain their loans. Some of them deserve to be turned down, but many business loan applicants are rejected only because they do not clearly and forcefully communicate their strengths.

Be aware that there are a lot of "gung-ho" residential loan officers out there these days who are eager to take applications for any kind of business. However, many residential lenders don't know "beans" about the ramifications of business and commercial financing.

Applying for credit is nerve-wracking enough as it is. There is no sense in taking the risk of getting turned down cold just because you applied at the wrong place or with a rookie loan officer. Commercial and business loans are different from residential mortgages, so it makes no sense to focus your search for financing on the residential loan market.

Choose an experienced commercial loan officer. The best choice is an SBA Loan Facilitator who already knows about Federal Small Business Administration Loans -- not one you have to train yourself.

Some people think lenders are all alike -- that a bank is a bank and a mortgage company is a mortgage company. Whatever they think, they often leave a lot of money on the table simply because they didn't know how to go about presenting their application or were misrepresented. Many business opportunities have been lost because potential business buyers wasted valuable time with the wrong loan merchants and could not meet closing deadlines and obtain financing in time.

SBA lenders and commercial loan and mortgage originators with inside knowledge who can actually package and present Federal Business Loans in government format service a diverse group of businesses that are often overlooked by most banks. Many banks and lending institutions are just not dealing with the real needs of small business. Using a commercial mortgage broker can often save you time and aggravation because they know how to prepare your loan request in government format and understand what it is that the SBA requires.

Being prepared is a very good trait to have when applying for a business loan. That means providing a complete package, including a business plan with at least three years worth of financial projections and financial statements so that the underwriter can reach an informed decision in a reasonable period of time.

Your loan package should always be concise and complete. A complete package gives your mortgage company or the SBA the impression that you are a professional, and they will view your package more favorably as a result.

The Small Business Administration has become easier to work with but in most cases still does not make loans directly to the public. Generally, you must apply through an SBA Loan Facilitator of Certified Lender.

SBA GETTING BETTER

Most people have the misconception that SBA loans are nothing but mountains of red tape, but things have changed for the better recently. The SBA now has a "low doc" loan and has streamlined its procedures. That is not to say that the SBA has become a give-away program, not by any means. However, the "new" SBA of 1995 is a place where you may find it easier to obtain a loan to buy or start up anew business, and that process will be even easier when you use a financial professional who knows how to get a loan through the system.

Approximately 95% of U.S. businesses are considered small by SBA criteria, so almost anyone can apply. SBA lending is now unmatched in small business financing. Under current guidelines, qualified borrowers can borrow up to $750,000 for terms as long as 25 years.

The best news is that it often takes no longer to close an SBA loan than it does to close a conventional residential mortgage, once the complete loan package is submitted. The new SBA loan program is probably the best thing the federal government has ever done for entrepreneurs. It's something you should be familiar with if you are thinking of buying a business opportunity and seller financing is not feasible.

Don't overlook other possible sources of financing, either. As mentioned previously, many building entrepreneurs find their seed money at home -- literally. That is, they tap into the equity they have built up in their own homes over the years. This can be done by refinancing an existing mortgage and taking some of the value in cash, by taking out a second mortgage or by establishing a home-equity line of credit.

Severance packages, employee buy-outs and lump sum pension payments are another popular source of business start-up capital, especially for recently "out-placed" employees. If the money in the question is in a qualified retirement plan, be sure to consult with your tax advisor before taking it out.

Many people dream about owning their own business for years and years, but they let their whole life slip by without ever doing anything about it. Life is too short and its opportunities often too limited. If you are convinced that owning a business is right for you -- and that you have what it takes to make it succeed -- don't let the opportunity slip your fingers.