Buying a Business

Finding the Best Business for You

Owning a business and owning the right kind of business for you are, of course, two wildly different things.  Owning the wrong kind of business can make you absolutely miserable.  So if you are considering buying a business, it is prudent that you invest the time and effort into determining the best kind of business for your needs and your personality.  In a recent Forbes article, “What is the Right Type of Business for You to Buy?” author Richard Parker explores how buyers should go about finding the right business fit.

Parker is definitely an expert when it comes to working with buyers as he has spoken with an estimated 100,000 buyers over his career.  In that time, Parker has concluded that it is critical that you don’t “learn on your own time.” 

His key piece of advice concerning what type of business to buy is as follows.  “While there are many factors to be considered, the answer is simple: whatever it is you do best has to be the single most important driving factor of the revenues and profits of any business you consider purchasing.”  And he also believes that expertise is more important than experience.  Parker’s view is that it is critical for prospective buyers to perform an honest self-assessment in order to identify their single greatest business skill and area of expertise.  The last thing you want to do is pretend to be something that you are not.

Parker makes one very astute point when he notes, “Small business owners generally wear many hats: this is usually why their businesses remain small.  Remember that every big business was once a small business.”  As Parker points out, whoever is in charge of the business will ultimately determine how the business will evolve, or not evolve.  Selecting the right business for you and your skillsets is pivotal for the long-term success of your business.

All of this adds up to make the process of due diligence absolutely essential.  Before buying a business, you must understand every aspect of that business and make certain that the business is indeed a good fit for you.  According to Parker, if you don’t love your business, it will have trouble growing.  This point is impossible to refute.  Owning and growing a business requires a tremendous amount of time and effort.  If you don’t enjoy owning and/or operating your business, success will be a much more difficult proposition.

Finding the right business for you is a complicated process even after you have performed a proper evaluation of your skills and interests.  After all, do you really want a solid business with great potential for growth that you would hate owning?  By working with brokers and M&A advisors, you can find the best business fit for your needs, personality, and goals.  These professionals are invaluable allies in the process of discovering the right business for you.

Copyright: Business Brokerage Press, Inc.

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Tackling Growth Delusions When Buying a Business

There is no doubt about it, it can be exciting to buy a new business.  However, in the process, it is very important that you don’t become unrealistic about future growth.  Keep in mind that in the vast majority of cases, if a business is poised to quickly grow substantially, the seller would be far less interested in selling. 

Richard Parker’s recent article for Forbes entitled “Don’t Be Delusional About Growth When Buying a Business” seeks to instill a smart degree of caution into prospective buyers.  Parker notes that when evaluating a business and talking to the owner, many buyers come away with a sense that enormous growth is just “sitting there” waiting to be seized.  In particular, Parker cautions those buyers who are buying into an industry that they know nothing about; those individuals should be very careful. 

When buying into an industry where one has no familiarity, there can be a range of problems.  The opportunities that you see may not have been tapped into by the existing owner for a range of reasons.  You couldn’t possibly guess what these reasons might be without more of a knowledge base.  Since you are an outsider, you likely lack the proper perspective and understanding.  In turn, this means you may see growth opportunities that may not exist, as the seller may have already tried and failed.  Summed up another way, until you actually own the business and are running it on a day to day basis, you simply can’t make a proper assessment of how best to grow that business.

The seductive lure of growth shouldn’t be the determining factor when you are looking for a business.  A far more important and ultimately reliable factor is stability.  The real question, the foundation of whether or not a business is a good purchase option, is whether or not the business will maintain its revenue and profit levels once you’ve signed on the dotted line and taken over.  You want to be sure that the business doesn’t have to grow to remain viable.

As Parker points out, the majority of small business buyers will buy in a sector where they don’t have much experience, and that is fine.  What is not fine is assuming that you can greatly grow the business.  Of course, if new buyers can achieve that goal, that is great and certainly icing on the cake.  But don’t depend on that growth.

In the end, everyone has some ideas that work and some that don’t.  You may take over a business and, thanks to having a different perspective than the previous owner, are able to find ways to make that business grow.  But realize that many of your ideas for growing the business may fail completely. 

A professional business broker will be able to help you determine what business is best for you.  A business broker will help keep you focused on what matters most and steer you clear of the mistakes that buyers frequently make when buying a business.

Copyright: Business Brokerage Press, Inc.

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A Closer Look at 3 Major Factors to Consider When You Buy a Business

The simple but undeniable fact is buying a business is one of the single greatest financial decisions a person can make.  Buying a business can lead to great financial success or great financial failure.  This fact helps to underscore why it is so important to work with an experienced broker who can help guide you through the often labyrinthian process of buying a business.

In a July 2019 article from Smallbusiness.co.uk, author Kyle Carins explores three key factors that everyone should consider before they buy a business.  The first factor covered in Carins’ article, “3 Things to Consider When Buying a Business,” is appeal vs. viability. 

Appeal Vs. Viability

Not surprising, the most important variable for most prospective owners is that the business is indeed viable.  Not being able to differentiate between an appealing business and one that is viable can lead to financial disaster. 

As Carins points out, “Do you want to make money or do you want to fulfill a dream?”  Sometimes those two variables can intersect, but not always and not often.  In the end, it is vital to know whether a given business is, in fact, potentially lucrative. 

However, as Carins points out, it is also important that you choose a business that you will enjoy.  Nothing can be more spirit crushing than running a business that you truly hate, even if it is lucrative.  Selecting the right business for you is something of a balancing act that must take in a variety of often competing variables.

Considering Hidden Costs

The second factor that Carins looks at is the issue of “hidden costs.”  One of the key reasons that it is so important to work with a business broker is that a business broker understands these kinds of factors that you might otherwise overlook.  Due diligence is amazingly important.  For those who have never bought a business before, working with a business broker offers substantial protection against making a potentially serious mistake.

Second Opinions

The third factor examined in Carins article is “Getting a second opinion.”  For Carins, getting a second opinion is actually linked to due diligence.  He feels that additional opinions regarding a given business should go beyond working with professionals and should also include talking to friends and family who know you well.  Additional opinions can help one see angles that might otherwise be missed. 

Again, buying a business is complicated and will take up a good deal of one’s time and mental energy.  Your friends and relatives, understand your personality and your wants and desires.  Their input can be particularly beneficial.

Finding an experienced business broker can help you do more than simply establish whether or not a given business is a “good deal.”  Brokers with years of proven experience can also help you determine whether or not a specific business is a good fit for you and your lifestyle.

Copyright: Business Brokerage Press, Inc.

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