Every once in a while I get a call from someone looking to buy a business that just makes me shake my head in amazement. This week, someone contacted me off our website and three things became abundantly clear two minutes into the conversation: 1. He was looking for free advice and had no desire to invest any time to learn how to buy a business; 2. No matter what I suggested to him, he had a reason why it wouldn’t work (that persona drives me crazy); 3. I would bet my kids’ college money against him ever buying a business.
By way of a brief background, he told me he has been aggressively looking to buy a business for four years. He told me there aren’t any good businesses for sale. I immediately asked how many sellers he had met over the years. Surprise, surprise, he had never had a face-to-face meeting with any seller. Instead, he confidently stated that “none of the businesses listed for sale were worth going past the listing”. In fact, all he had done for four years is to peruse online business for sale listings and never contacted any sellers.
He also mentioned of course that “every broker is a liar”. I was initially inclined to just end the conversation, but I was so flabbergasted by his absurdity, I had to find out how he could be so delusional.
Now you know why I was willing to bet he will never complete a transaction.
Four Very Important Lessons:
First, you cannot buy a business based upon an advertisement. That is not the purpose of scouring listings. The objective is to focus in to a specific category of business type but a buyer absolutely must go beyond a listing and contact the broker/seller. No listing can justifiably explain the business. If there is anything, and I mean ANYTHING about the listed business that piques your interest, contact the seller.
Second, anyone who is truly serious about buying a business and goes about the process correctly can easily accomplish their goal within six months. In the seminars I used to do, I would tell the audience that I could be parachuted out of a plane anywhere in North America and within 90 days I could find a good business and buy it at very attractive terms. It all comes down to being prepared and knowing exactly how to proceed.
Third, this caller also mentioned that “every” business was entirely dependent upon the owner and a new owner was “guaranteed to fail”. That was another head-shaking moment. Yes, it is true, many small businesses are dependent upon the owner and in many cases the assets of the business leave at night when the seller closes shop.
However, as someone who has met with thousands of business owners over the past two decades, I can assure you that very few of them are geniuses.
The successful ones have been able to build a business through hard work, good staff and sometimes a bit of luck.
But very few of them started off with any significant business experiences. They either started or purchased a business that they were reasonably capable of operating and over time became more competent at running.
They brought certain initial skills and adapted them effectively to the business. They learned everyday and most importantly, they continued focused upon finding new opportunities to build their companies.
Operating a successful business takes tenacity and commitment as much as it requires certain skills.
There are tons of business types that can successfully transition to new ownership as long as the buyer understands their core strengths and makes certain that they match their skills to a business that needs those specific attributes to not only be sustainable, but to grow as well.
Fourth, business brokers want to sell businesses as badly as serious buyers want to purchase them. Their job is not to make decisions for the buyer – their role is to facilitate the transaction and they can be very helpful. Certainly, like all industries, there are good and bad ones, but again, any buyer who blames a broker for their failure is simply looking to shift the blame from their own inadequacies.
Every Prospective Business Buyer Has Two Choices:
They can search the Internet to perpetuity looking to find a once-in-a-lifetime opportunity or, they can roll up their sleeves, realize there is no such thing as a “perfect business, properly prepare themselves for the process by educating themselves, and meet with enough sellers so that they can identify the right business once it surfaces.
The business-buying process is simple.
Purchasing a good business and negotiating great deal terms is easy to do once you know how. But, if you adopt the strategy of only looking for reasons not to buy one, I promise that is exactly the result you will achieve.
If you truly want to control your own destiny by purchasing a business, then take control over the process and recognize the fact that it is you, the buyer, who must create your own success.
Have a great week.
Richard Parker