When meeting potential business buyers in my office, I usually state up front that unfortunately the odds are against them. I do this for the purpose of discouraging the "tire kickers" who don't have the right attitude to be able to go trough the whole business purchase process and complete a transaction.
Statistics have shown that in the US more than 90% of potential business buyers actively looking to purchase a business never complete a transaction in their whole lives. These individuals waist their time and money, sellers' time and brokers' time and energy.
The following suggestions will help increase the odds for potential business buyers competing a transaction in a reasonable time period.
- Do an introspective analysis about yourself, your goals and your readiness to become an entrepreneur. Some people are better off having a job and collecting a paycheck. There is nothing wrong with that as ling as you recognize it.
- Make sure that your finances are ready. You need money to buy a business and canadian banks very rarely finance the purchase of small business. Even when they do, they frequently have tough criteria that eliminate some of the best opportunities available.
- Use the right professional advisors and use them wisely. Lawyers and Accountants are necessary to purchase a business of a decent size but don't rely on them to encourage you to pursue with a transaction because they will probably advice you against. They are conservative by nature and their role is more about showing you the possible downsides rather than the upsides of the transaction. You should listen carefully to their analysis of the risks involved but you should make your own decision about whether you are willing to take such a risk or not. Most buyers who hide behind their advisors never complete a deal.
- Be patient and tolerant of sellers' bursts in emotions. Business sellers identify themselves with their businesses. They are their babies. They can become extremely emotional. They can change their mind about the whole idea of selling the business or about dealing with you as a buyer. To establish an excellent relationship with the seller from the beginning. If the seller likes you personally, the deal is on the right track .Don't criticize the business or the seller as a way to reduce the asking price. On the contrary, you should praise the seller's accomplishments. In general, Business Brokers know how to deal with sellers' emotion, so listen to their advice. A good relationship with the seller will also help you in the transition period when you need all the tips and tricks the seller is willing to teach you.
- Focus your search for the right business. Business sellers want to know why you are interested in their business particularity. If you are jumping from one opportunity to another and show a lack of focus, sellers with not take you seriously and will disqualify you. While it is advisable that you investigate more than one business before making a purchase, looking at too many businesses will simply increase your indecision.
- Finally, do not tell all your friends and acquaintances that you are buying a business and do not ask for their opinions about what you should do. Most people are not entrepreneurs, they will not make the jump and buy or start a business. So most people will discourage you from making the jump yourself. It is very easy to justify why an opportunity might be a bad opportunity. This rationalization is a simple way of avoiding making tough decisions.
If you are ready to avoid the pitfalls that plug most potential buyers then you are probably among the 10% who do buy businesses.