I have the same question. For me, the largest chunk of money needed will likely simply be my own living costs, as I aspire to search locally.

For the search or the purchase? One of the survey’s on here posed that question and I think the most common answer was $400k-$500k, which I assume was for the purchase.

Search cost seems to vary, particularly if you are including covering personal expenses. Other considerations are direct sourcing vs broker outreach, national vs local, potential broken deal costs, etc.

The HBR Guide (book) To Buying a Small Business had a pretty good breakdown of those items, I would be curious on others thoughts as I’m also at an early stage.

Another data point is the Stanford study that is released every other year[redacted]was just released). It has stats on how much money funded searchers raise, which pays their salary and their search costs. Covering your living costs will definitely be a large part of the cost, depending on how tight of a budget you can live on.

Depends. Are you married? Do you have kids? How far are you willing to cut your personal expenses? I was homeless and lived on friends' couches, floors, and guest beds for a year. I worked odd jobs like driving Uber and became a part-time fly fishing guide to minimize my burn. And I wracked up some credit card debt. Search isn't glamorous. Running a service-oriented small business isn't very glamorous. The bulk of your employees are probably going to be people you aren't used to dealing with on a day-to-day basis. I think it's healthy to slash your lifestyle during the search phase as it prepares you for a lean first year or two of business while you focus on paying back your investors and deleveraging. It also will help motivate you and you will know what you're working towards. Your future employees will also be looking for clues on what kind of lifestyle you are living. Modest living will go a lot further in building credibility and getting people to buy into your mission than showing up to work in a fancy vehicle. Again, search isn't glamorous.

I’m currently going through this right now. Running a search and working a full time job at the same time. Certainly
not easy but to me beats the alternative.

You need to be prepared for the search to take up to a year, so you'd want to have that much in living expenses ready, if you won't be working outside of your search. Obviously the more you have set aside the more time you give yourself, but you should always have a minimum of 6 months living expenses set aside regardless. You also want to identify the amount you'll need to bring to the table in down payment and closing costs for the business you eventually purchase and have that readily available, too.

We’ve bucketed it into four camps - 1) living expenses (YMMV) 2) search expenses 3) diligence/legal expenses and 4) equity to invest in the business.