If you’ve ever watched one of the myriad of home renovation shows, you understand the importance of staying realistic with your must-have’s in a home when you are looking to buy. You can’t expect perfection when you are looking for a deal.
A similar truth rings true if you are looking at buying a business. Many new prospective business buyers come to the market with an eternally long list of what their ideal business must have before they buy. They literally want the perfect business. Guess what? The perfect business doesn’t exist.
We’ve seen some interesting perfection-seeking, must-have lists – like only wanting a business where the owner is retiring, the business is at least 10 years old, the landlord is willing to lower the rent and it must be able to run with an absentee owner – all for less than $50,000. Realistic? Definitely not.
The problem with this approach is the longer your must-have list, the less likely you are to find a business. You may end up in buyer purgatory forever, always searching for the “perfect” business.
Your first step towards successfully finding a business is letting go of the must-have’s and instead focusing on the goals you would like to achieve as a business owner. What are you looking for – a chance to be your own boss, more financial freedom, the opportunity to follow a passion? Ask yourself these questions first, then look for a business that will fit with your goals.
Your next step after defining your goals is to decide what issues you will be willing to deal with and which will be deal breakers once you find a business. All businesses are inherently complex and all businesses have issues of one kind or another – so be ready to make decisions on what’s do-able and what’s a deal-breaker.
Some examples of do-able issues might be a restaurant with falling numbers but an ineffective and disgruntled waitstaff that could easily be replaced, thereby turning customer service reviews around. Or perhaps a retail business that has zero online presence and no marketing plan to speak of that you could make profitable with some marketing savvy and a good website.
A deal-breaker issue, on the other hand, might be finding out during due diligence that you would be inheriting an $80,000 debt that the seller tried to conceal.
While searching for a business, remember that the past records of a business are just that, they’re the past, and the future of the business and what you could do with it are up for grabs. Just like in the home renovation shows, it’s not the house at the beginning of the renovation that counts, it’s the finished product that matters.
A creative buyer with some decent marketing know-how can turn around a less-than-ideal business in short order if they have a decent plan in place. By applying your personal strengths and experiences you can make many businesses fit with the goal you would like to achieve.
Just remember that there is no such thing as the perfect business, so keep an open mind and keep your must-have list short.
Are you looking at buying a business, but you can’t seem to find one that fits with your goals? Do you think your must-have list might be too long? Do you have questions about what issues are do-able and what issues are deal-breakers? Ask us! Leave a comment or question here, and we would be happy to help.
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