Some People Are Simply Not Meant to Buy A Business

Every once in a while I get a call from someone looking to buy a business that just makes me shake my head in amazement. This week, someone contacted me off our website and three things became abundantly clear two minutes into the conversation: 1. He was looking for free advice and had no desire to invest any time to learn how to buy a business; 2. No matter what I suggested to him, he had a reason why it wouldn’t work (that persona drives me crazy); 3. I would bet my kids’ college money against him ever buying a business.

By way of a brief background, he told me he has been aggressively looking to buy a business for four years. He told me there aren’t any good businesses for sale. I immediately asked how many sellers he had met over the years. Surprise, surprise, he had never had a face-to-face meeting with any seller. Instead, he confidently stated that “none of the businesses listed for sale were worth going past the listing”. In fact, all he had done for four years is to peruse online business for sale listings and never contacted any sellers.

He also mentioned of course that “every broker is a liar”. I was initially inclined to just end the conversation, but I was so flabbergasted by his absurdity, I had to find out how he could be so delusional.

Now you know why I was willing to bet he will never complete a transaction.

Four Very Important Lessons:

First, you cannot buy a business based upon an advertisement. That is not the purpose of scouring listings. The objective is to focus in to a specific category of business type but a buyer absolutely must go beyond a listing and contact the broker/seller. No listing can justifiably explain the business. If there is anything, and I mean ANYTHING about the listed business that piques your interest, contact the seller.

Second, anyone who is truly serious about buying a business and goes about the process correctly can easily accomplish their goal within six months. In the seminars I used to do, I would tell the audience that I could be parachuted out of a plane anywhere in North America and within 90 days I could find a good business and buy it at very attractive terms. It all comes down to being prepared and knowing exactly how to proceed.

Third, this caller also mentioned that “every” business was entirely dependent upon the owner and a new owner was “guaranteed to fail”. That was another head-shaking moment. Yes, it is true, many small businesses are dependent upon the owner and in many cases the assets of the business leave at night when the seller closes shop.

However, as someone who has met with thousands of business owners over the past two decades, I can assure you that very few of them are geniuses. The successful ones have been able to build a business through hard work, good staff and sometimes a bit of luck. But very few of them started off with any significant business experiences. They either started or purchased a business that they were reasonably capable of operating and over time became more competent at running.

They brought certain initial skills and adapted them effectively to the business. They learned everyday and most importantly, they continued focused upon finding new opportunities to build their companies. Operating a successful business takes tenacity and commitment as much as it requires certain skills. There are tons of business types that can successfully transition to new ownership as long as the buyer understands their core strengths and makes certain that they match their skills to a business that needs those specific attributes to not only be sustainable, but to grow as well.

Fourth, business brokers want to sell businesses as badly as serious buyers want to purchase them. Their job is not to make decisions for the buyer – their role is to facilitate the transaction and they can be very helpful. Certainly, like all industries, there are good and bad ones, but again, any buyer who blames a broker for their failure is simply looking to shift the blame from their own inadequacies.

Every Prospective Business Buyer Has Two Choices:

They can search the Internet to perpetuity looking to find a once-in-a-lifetime opportunity or, they can roll up their sleeves, realize there is no such thing as a “perfect business, properly prepare themselves for the process by educating themselves, and meet with enough sellers so that they can identify the right business once it surfaces.

The business-buying process is simple. Purchasing a good business and negotiating great deal terms is easy to do once you know how. But, if you adopt the strategy of only looking for reasons not to buy one, I promise that is exactly the result you will achieve. If you truly want to control your own destiny by purchasing a business, then take control over the process and recognize the fact that it is you, the buyer, who must create your own success.

Have a great week.

Richard Parker
Diomo.com - The Business Buyer Resource Center™

Comments

[Don Barrick]

Brent, your comments are cynical, in the extreme. Certainly, there are SOME of those Sellers out there, such as you mention. However, that is all cured by due diligence, appraisals and valuations. The same can be said for SOME Buyers, who want something for nothing, will pay 40 cents on the dollar for a valid business and have unreasonable expectations of value and the Sellers' responsibilities in the transaction. A good Broker helps the Seller get a top price for the proper value of all assets, reflictive of Cash Flow. A good Broker would also demonstrate to the Buyer the validity of those issues and how the business can be financed, in an understandable and responsible way. The generalizations you make suggest that you have not been working with GOOD Brokers, or that your own outlook is based on erroneous thinking.

[markcmartin15@gmail.com]

The very core and essence of a company is to be viewed by all customers as the first and only choice. The easiest way to achieve that goal is to ensure that every customer experience results in a very satisfied loyal, frequent user customer who recommends your business to their friends and neighbors. It’s no secret that there’s a huge buzz for our Toppers brand pizza in Ontario, and we’re not shy about the fact that we’re now offering franchise opportunities there,either. Specifically, we’re initially targeting the Toronto and Ottawa markets – since there are way too many colleges and universities there to count – and guess who eats a lot of our product? Oh yeah – college and university students. Lots of them. business for sale in Ontario

[Best SEO services]

I would say its indeed quite risky nowadays to buy a business. So, may be this would be the reason, people are unable to decide instantly whats's good and what's bad, whom to trust and whom not to. Often we can hear news of fraud cases specially in this field. So, I would say one should be completely satisfied before start implementing rather take decision in a hurry and regret afterwards.

[Business website on sale]

I think buying a business needs good investigation of about What business, its past and present market conditions, its financial status, market reviews, and lots more that could not be explained in few lines. But that doesn't mean that anybody will behave in the way as you have described in your article. good lesson.

[Freebizreviews.wordpress.com]

I am also looking for a buying a business online. Indeed, keep patience if you are going to buy a business online, search in several directories, and explore some listings, contact business owners and brokers around. You guys must try these websites www.businessforsale.com or www.bizbysell.com

[small business for sale]

Good article, you cleared my several assumptions.

[Angel]

Really like the blog, appreciate the share!

[business for sale]

Business - buying is a process, which one should execute carefully. Before buying an existing business , one should investigate its past activities ,the financial, the market , the customers, the industry, the employees, the competition, its operations, its current status, and its future potential.

[Brent Decker]

Sellers try to rip off the buyers in 5 different ways.1-Inflated real estate values.Commercial buildings depreciate but the seller still wants what it cost them to build 30 years ago.2-Fully depreciated equipment ready for the junkyard but the seller wants what he paid for it.3-Inflated inventory values.Seller hasnt restocked since they put business for sale years ago.4-Cooked books designed to fool the IRS are useless to the buyer and the banks.5-Blue sky,sellers expect buyers to pay premium for business on books that wont pay the banker nor feed the buyers family.Brent Decker