several years ago when I decided to expand our consulting business, I decided to get involved in the business brokerage industry.
I have long believed that when you want to learn something new, the best way to guarantee your success is to find someone who is already successful at it and just copy them. With that in mind, I approached several business brokers in the industry to pick their brains. This group included top producers and others barely making a living. I wanted to copy the former ones and be sure not to duplicate what the latter group was doing.
The other brokers did, to a certain extent, back up these thoughts as well by suggesting that buyers mislead sellers, or there are very few buyers who are truly committed to getting to a closing, etc.
This strategy is the one that has been followed within the business brokerage field for decades. As someone who only works with buyers and has built a very profitable business in this sector, I was stunned to hear how brokers perceive buyers given the fact that it takes a seller AND a buyer to get a deal done.
Not much has changed in the brokerage industry over the past many years and that philosophy remains today, but before buyers start screaming, I have learned that there is in fact a degree of justification for this generally dismissive view that brokers have towards buyers, albeit less dramatic that labeling all buyers to be unqualified or liars.
This antiquated attitude is also why a large part why prospective business buyers find it so difficult to deal with many brokers or why most buyers find the entire buying process to be so frustrating.
Buyers have to keep in mind that regardless of market conditions, unlike real estate where the market switches between a “buyer’s” or “seller’s” market, in the business sale sector, it is always a seller’s market. There are always a ton of people looking and the majority (less than ten percent) will ever buy a business. And so, business brokers know that over ninety percent of the buyer inquiries they receive will not result in a successful transaction. It is hard to persecute an entire industry knowing that nine out of every ten inquiries they get will unfortunately be a waste of their time. Additionally, there are a lot of garbage businesses listed for sale but the good ones always sell quickly and at good price and terms.
With that in mind, buyers must separate themselves from the crowd. They must first and foremost be serious about this project. Next, they must be educated. Third, it is useless to hide your financial situation or worse, to be delusional thinking you can buy a business for no money down. It is simply not going to happen.
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