In the last blog post I talked about industry statistics and generic business for sale data which can often be more detrimental than helpful in the business buying process. My take on it actually goes beyond the statistical aspect and dovetails well for this week’s discussion.
I have been in the business for sale sector for more than twenty years in all aspects – as a buyer, seller, broker, advisor, author and financier. In my current focus in the publishing of buyer “how to” guides, I receive a lot of emails from prospective business buyers who have visited one of the various websites we have on this subject matter who are seeking free information. From these inquiries, it is so obvious to me that the reason why so many prospective buyers never become business owners is a result of their complete lack of focus.
The Internet has actually been a detrimental tool in this regard because anyone can spend countless hours searching business for sale websites, reading tidbits of generic information from various sources claiming to be experts, and thus the so-called “buyer” actually believes they are making progress when all they are doing is wasting time.
This shotgun approach to the process will rarely yield any success. To effectively go from “looker” to buyer requires focus. It requires a plan. It requires knowledge. You need to have a laser beam approach.
This week, amongst the emails we received from our website contact page were a number of questions from individuals who are not our clients, although we are always happy to answer them. These examples perfectly highlight the problems I mentioned earlier. Here are a few of them:
- “If the purchase price is X what should the net profit be as a guide?”
- “If I buy a restaurant, what return on my investment should I expect? I don’t need any help buying a business but I what's the point if I can't make an educated guess as to how much money I'll earn off it?”
- “I don’t want to waste money on a lawyer to buy this company – what do I need to know to protect myself and get a good deal on this business?"
I don’t know about you, but to me, these are “give your head a shake” questions. I mean seriously, how could someone possibly ask such outlandish, generic, open-ended, and even dangerous questions? How can anyone expect there to be an answer to them? To me, these explain a good part of why the rate of successfully completed business purchases is so miniscule.
If you ask generic questions, don’t expect specific answers. If you are new to buying/owing a business, don’t fool yourself into thinking that you have any clue what to do. There are a massive amount of considerations to be made in any deal, regardless of the size of the business. None of these issues are beyond anyone but certainly, if not given adequate attention, you will overlook them.
I desperately want to see prospective business buyers succeed because I know first hand how incredible owning the right business can be and the positive impact it can have on someone’s life. And so, I am bothered by the fact that for some bizarre reason, so many prospective business buyers and many sellers as well, do not feel the need to call upon and leverage experienced advisors such as at business brokers, industry experts, attorneys or accountants to assist them in this process. A buyer who foregoes the importance of equipping themselves with proper knowledge, who simply floats from website to website expecting to acquire meaningful knowledge, who ridiculously believes the ideal business will just fall in their lap, or who flippantly dismisses the importance of being surrounded with the right team, will almost certainly spin their wheels “looking” for a business and never get to the finish line and actually buy one. Or worse, they will end up making enormous mistakes along the way.