BizQuest's Business for Sale Blog

How 33 People Are Buying a $20 Million Business

I received a general email a couple months back from a man named Ron Baker with a simple message: "please call me". Since I've always made it a point to speak with or meet with anybody who contacts me, I called him. He told me about a workshop he was putting on for prospective business buyers in Fremont, California and he wanted to include our materials in the curriculum. I was struck by Ron's sincere agenda to really help people. He ordered a number of copies and right after the two-day workshop he told me the response was overwhelming. After reading some of the attendee comments, I had to agree.

Ron took it one step further. He located a phenomenal business generating over $5,000,000 in Net Income and assembled the entire seminar group into an investment partnership and they're now in the final stages of closing the deal. The wild thing is that this entire process took less than one month. The lesson here is that the only thing standing between you and the ideal business is having the right information at your disposal.

Take a minute and read the complete story about Ron's group it's REALLY inspiring. While visiting the website, you may want to inquire about the upcoming workshop on June 30th - you never know what can happen after attending.

A Time to Work - A Time to Search

Prospective business buyers find it hard to believe that 90% of the people who begin the search to buy a business never complete a transaction. After all, you're probably very enthusiastic about buying a business, how could this zeal wane so quickly? There are a lot of reasons I'll discuss in coming posts, but one thing I want to talk about today is when buyers do their searching. I find it amazing that the majority of purchases made for our program are done during the week, mostly during the day. I also know through surveys we've done over the years, that most prospective business buyers are currently employed. It doesn't take a genius to realize most people are searching while they're at work, getting paid by someone. Using work time for personal matters is not right, and probably grounds for termination, it's also a terrible strategy for buying a business altogether (by the way, once you own a business how will you feel if your employees are online for personal things when you're paying them???).

In any case, you can't be effective searching when you can only steal a few minutes here and there. Finding the right business is the most critical step in the entire process of buying a business. Instead, set aside at least one hour three times a week away from work when you can go through listings effectively, make proper notes, compare various businesses for sale, note follow up, list your specific questions about each listing and simply do a better job in the initial analysis. Don't rush. This is important. If you don't address the business buying process properly you'll either going to be a 90%er, or you're going to make a huge mistake.

Meeting Suppliers, Clients and Employees Before the Sale

Anyone selling their business is going to be concerned about maintaining confidentiality. If word leaks out, it can wreak havoc on the business; whether it is sold or not. Customers, suppliers and employees can start an exodus. Business buyers must be sensitive to this concern. After all, it can also harm you if you buy the business and you discover that you've lost some of these people. However; the fact remains that you may need to validate what the seller is representing. This can entail a need for you to meet suppliers, customers and employees. Nevertheless, it must be done at the appropriate time and it requires a methodical approach.

If you're buying a local deli then meeting the employees may not be necessary at all prior to closing. However; if there's a chef on staff who is critical to the business, then it may be required. Regarding suppliers and clients, if their contribution to the business is critical, or if there are any substantial supplier contracts or customer concentration issues, then meeting with them may be an absolute necessity. Yet, you must understand the appropriate timing which may only come after you have signed off on the financial review.

While respect of the seller's confidentiality is crucial, likewise, if the future business success hinges upon any special supplier, customer, or employee relationships, then you need a mechanism to meet with these folks at the apprpriate time and satify your concerns. Perhaps you are introduced as an investor, or sales trainee, or an associate of the seller's for a new branch office. There are numerous ways to do this discreetly but it must be done in cooperation with the seller.