Do You Really Need To Buy A Business Or Just Want To?

I tend to get a lot of blog comments in the fourth quarter each year from dejected buyers who had started the year off hoping to buy a business, and find themselves on the cusp of giving up. And so, I want to take some preemptive action and provide a business buyer’s attitude check-up, which I know will help you as you search for the right business for sale.

A series of events happened since last Monday the 14th that triggered this week’s comments so please allow me to give you a roundabout explanation.

I am not really a sports nut, but I am fanatical about two specific teams. Although I follow each with insane dedication, once they are out of the playoff picture, I lose much of my overall interest in the game.

First, I have been a die-hard Buffalo Bills fan since I started watching NFL football in the thirty plus years ago. No doubt, a few of you will point to four consecutive Super Bowl appearances in the 1990’s without a championship (at least they got to the big show), or most recently, last Monday’s last-minute loss to the Patriots (I thought they played brilliantly and way above what anyone anticipated). No problem; I, like most Buffalo Bills fans, have skin as thick as a Buick (we need it). Regardless of their dismal performance since those great years in the 90’s, my faith in them has never waivered. In fact, it has gotten stronger.

Second, coming from Canada where hockey is pretty much a religion, I have followed the Montreal Canadiens (yes, spelled with an “e”), since I was born. I watch sixty-plus games a year, and with them as well, I shall forever remain a loyal fan.

So why am I telling you this and what the heck does it have to do with buying a business?

Actually, it has a ton to do with it…..

I have always been bothered by the awful statistics in this industry, and namely that less than ten percent of the people who look to buy a business ever complete a transaction. It blows my mind that so many people could actually abandon a dream-like project once they hit a roadblock or two, because that is the only possible explanation. Of course, they hit hurdles because they don’t know what they are doing, and most buyers do not have the common sense to educate themselves first, even if they have zero experience buying businesses.

Simply giving up on buying a business because of a few hurdles would be similar to The Bills burning all their equipment and folding the team because they lost a game, or a Super Bowl, or four, or whatever.

That is not what successful people do.

I look at The Bills loss last week the same way every business buyer has to look at any hurdles, challenges or setbacks they encounter while looking for the right business for sale.

The team’s prior loss was history; it’s what they would do next that counts.

To me, a win in week two, after such a tough defeat, would actually build more character than a win over The Patriots would have provided. Sure enough they came out flying in their game on Sunday and won convincingly. That shows their true core.

Similarly, if you are not making progress buying a business, or a deal dies, or a seller’s numbers are off, you don’t just give up. You hit the ground ever harder.

Your loyalty to this project has to mirror that of a dedicated sports fan who never gives up on their team. If your team loses, you don’t jump on another team’s bandwagon. That’s not a fan.

When a deal collapses (and they will), or brokers don’t call you back, or you cannot come to terms with a seller, or you uncover huge problems during due diligence, you don’t just toss in the towel and start looking for a job (even if there were any of those available). You have to file the experience. You learn from it, and you move on to finding the next and hopefully better opportunity.

Buying a business can be a time-consuming and very frustrating process. You can always find reasons not to buy a particular business, or blame your lack of progress to external forces, or kowtow to people’s opinions that now is not the time to buy a business. These same people would tell you the exact same thing if the economy was booming.

The anguish doesn’t end there. There will be businesses you like that are snapped up by other buyers before you can make an offer. You could go into due diligence on numerous businesses only to be forced to walk from the deal.

You will encounter situations where you can easily justify abandoning the project. That is probably why so many do. However, the one common trait every successful business buyer has is a core belief in what they are doing. They do not approach buying a business with the attitude that if a good opportunity surfaces they will investigate it. That is what “lookers” do; not buyers.

A true prospective business buyer fundamentally know that they MUST become a business owner because they are no longer willing to keep doing whatever it is that they have been up to this point.

Successful business buyers don’t just want to buy a business; they NEED to buy one.

If you do not have a burning need to buy a business, let me save you a lot of time – start filling out job applications because you don’t have the mindset to buy a business.

When you truly “need” something, you keep forging ahead until you get it. That is what defines success.

If you are going to attack this project in any meaningful way, you will have setbacks; it is inevitable, but you need to stay focused on the goal line.

Just like The Bills, who no matter what happens, no matter what anyone else says, no matter how many times they get knocked down, they show up to play every Sunday. So too must you get into the game, take some hits, but you have to fight until you get to the end zone.

To read some very helpful articles about buying a business visit www.diomo.com

Have a great week.

Comments

[Mat Thompson]

hello Richard, I've been following your blog for sometime now and I greatly appreciate your insight.

As a prospective business buyer, what would you say to those of us out there that know we "Need" to be a business owner.....we're just wrestling with whether we want to buy one(truely great businesses for sale seem to be few and far between) or start one ourselves?
thanks.

FROM RICHARD: I have bought ten existing businesses and started five others and in my own experience, buying is infinitely better. While I do recommend that every enterprising individuals should go through at least one start-up, I would never suggest so in this market. Here is a great article to read about why an existing business is preferrable : http://www.diomo.com/why-buy-an-existing-business.html

[Joe Davis]

Apostrophes used incorrectly in 1990's, etc., when plural. Distracts from the message.

FROM RICHARD: Appreciate the insight thank you.

[Leon Parker]

Richard:
Good challenge to the customers who think they would like to be buyers. The challenge to us as business intermediaries is to figure out who is a real buyer with the fire in their belly, and stop wasting time with the customers who are going to drop out. After 22 years in the business I still haven't totally figured out how to do that.

As a Patriots fan I was glad they beat your team, but they sure blew the next game!

Leon