Finding a good business to purchase is not easy – at any given time there is a limited supply of established and profitable businesses that are priced reasonably. Good businesses sell fairly quickly regardless of the economy as there are several qualified purchasers actively looking to purchase a business. If you do find the “right” business that matches your purchase skill set and is fairly priced – odds are very good that you will likely find you are in competition. Very simply, the current supply/demand equation is imbalanced - there are many more qualified Purchasers than there are good businesses for sale. How do you separate yourself from the crowd of prospective purchasers who end up never purchasing a business?
Become an educated Purchaser and learn how businesses are valued and what the current market conditions are (develop realistic expectations based on education and real market knowledge). Your professional advisors (lawyer, accountant, and banker) and an experienced Business Broker like Ostir Business Brokers can help you with this.
Become a strategic buyer
Develop purchase criteria and look for businesses which best match your skill set and preferences. Many prospective purchasers will say they are not sure what type of business they want to purchase and explain they are an opportunist – that when they see the “right business” they will know. Being an opportunist sounds good but the trouble with that general approach is that you will be competing with strategic purchasers who know what they want – they will have extensive knowledge of the industry, developed a plan for how to grow businesses in that industry, and have adopted a bias for action. More often than not, a buyer who is not sure what business they want will have difficulty competing with a strategic purchaser.
Accept that there is no such thing as the perfect business.
Every business transaction has risk and every business has a weakness (along with strengths and opportunities). If you are looking for a perfect business and that moment of absolute certainty when to purchase it – it is unlikely you will ever purchase a business.
Be likable and Establish Trust with the Seller.
Demonstrate you are serious and thoughtful. Take time to listen to the seller and learn about them and their business. Engage in thoughtful discussions with the seller – the evaluative process does not have to be adversarial.
In our experience, the single most important trait that successful Purchasers possess (individual entrepreneurs and corporations) is the ability to establish trust and establish effective dialogue with the business owner – be likeable – business owners like selling to people they like and trust.
There are some experts who will argue that the concept of a ‘win-win’ scenario is not realistic. They will argue that such a scenario where both sides are reasonably happy is simply not possible. While there is no such thing as a perfect deal, our experience has taught us that a win-win transaction is certainly possible and we encourage parties to enter into the purchase of a business with this theme in mind. Business negotiations and transactions do not have to be adversarial.
Ostir Business Brokers recommend that Purchasers do their best to educate themselves about every aspect of the business purchase process, develop purchase criteria, engage good professional advisors, and most importantly, try to be likeable – establish trust with the seller. If you follow this plan, then there is a very good chance you will separate yourself from the crowd of prospective purchasers who never complete a transaction.