About This Blog

This blog is edited by Richard Parker, the President and Founder of Diomo Corporation and a world renowned expert on buying and selling businesses. He is the author of six comprehensive programs on buying businesses including the best-selling How To Buy A Good Business At A Great Price© series and has had over 100 articles published. Richard is also a highly sought after intermediary and recipient of the Business Brokers of Florida Top Dollar Producer having sold the highest volume of business in the State of Florida. Since 1990 he has purchased ten businesses and has started several more. As President and Founder of Diomo Corporation, his materials and live seminars have helped thousands of prospective small business buyers in over 70 countries realize their dream of business ownership. He is also on the Trump University faculty for Entrepreneurship.

This blog is Richard's exclusive space to rant and rave to the BizQuest audience of buyers and sellers on whatever subject tickles his fancy, but he promises to include at least an occasional posting having something to do with buying or selling businesses.

He hopes that you will also take advantage of the "Ask The Expert" aspect of this blog by sending him your questions. All reasonable questions can expect to receive a personal response from Richard and the better ones will be posted on this blog - don't worry, your name will not be included in the posting.

You can send Richard your questions or otherwise contact him by visiting the Diomo Corporation website and clicking on "Contact".

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Choosing the Right Business to Buy

In our recent survey, the three most common buyer concerns after valuing a business were: choosing the right one, financing the purchase and conducting due diligence.  Today we will talk about how to choose the right business to buy.

I went through a stack of client emails on this subject that we have received over the years and there are clearly some common threads that surface.

The most important issue that a buyer needs to address is by taking a truthful self-inventory. Identifying your strengths is crucial, but recognizing your weaknesses is at lease at important. In my experience, good business people know their strengths. Great ones know their weaknesses. So the lesson is simple: be honest with yourself. Don’t try to be something you’re not.

Next, you must understand that there are a lot of good businesses that are being run by the wrong people. The application of the right skill to the right business set can truly grow a good business into a great one.

One of the gravest mistakes buyers make is confusing past work experience with skill. Just because you have been in a certain industry for a while does not make you an expert in it. Similarly, it does not mean that you have to pursue a business in that sector. Unless a business is highly technical, you can always learn a new product or service or industry. But trying to become an expert at a new skill is not easily done. So again, identify what it is that you do best, and marry that skill to a business that needs that skill to either replace the owner’s contribution or build the business.

So Where Do You Start?

At the beginning of course! Actually, there is a proven formula to follow. Keep in mind it is easy to get overwhelmed with so many possible businesses for sale. Instead of jumping all over the place, here’s what to do:

Identify some broad categories of prospective businesses (you may want to first eliminate what you don't want)
Contact and visit with at least two sellers in each of the categories you initially identify.
After you've met with 10 sellers, your ideas will begin to crystallize – guaranteed.

While you may rule out all ten companies, what you want to do is hone into what you like and dislike about each type of business and category. Even though the ones you visit may not be ideal, the actual type may suit you well and so you can adjust your thinking and focus more clearly.

Ask yourself: What is it specifically that you do best because whatever it is that you do best must be the single most important driving factor of the revenues and profits of any business you consider buying and running.

Comments

I think with rising gas prices you may see alot more Towing Companies for sale.

Thank you for writing about the first steps in buying a business. I work for a microlender and advise many small businessess for a living. I can't help but think they would be spared a lot of trouble and a high failure rate if had they researched the business potential in the first place. Instead, so many people do, as your article suggests, think about what they like, or take one aspect of what they know how to do and assume that running a business in it is a good idea. They couldn't be more wrong.

Thank you very much for your post. I'm really newbie at brokerage service of flip website. Your blog very valuable for me. Thanks.

Not just tow trucking, but I'd think MOst ANY business that requires driving to a customer might not be a good idea these days. Any comments?

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