Small business sales can fall apart for a multitude of reasons. Any time you are contending with what may be someone’s life’s work and large amounts of money changing hands – there are bound to be challenges. The problems arise when those challenges are more than the deal can take. When that happens, no one ever makes it to the closing table.

As a business buyer, you may find that some reasons for deals coming undone have little to nothing to do with you, like if a seller suddenly decides they’d rather not sell, but there are some common issues that have everything to do with your end.

Sure, buying a business is a huge investment, both of time and money, but a ridiculously over-cautious, inflexible and inexperienced buyer can sink a business transaction as fast as an unwilling seller. The key is balance and understanding.

Before you get anywhere near a closing table, you may need to do a fair bit of introspective thinking. Do you really want to buy a business? Sure, owning your own small business is the American dream, but it is not always the easiest way to earn a living. Entrepreneurs can work long and intense hours, so you need to be sure that you are ready for that part of being your own boss. If you have done the requisite self-reflection, now it is time to go looking for the right business for you.

This may seem like a silly thing to point out, but you should choose a business that is going to suit you in terms of expertise and ability as well as one you actually like. Buyers might think they want to move to a completely different industry from where their experience lies, only to find that they are overwhelmed by the prospect of essentially starting from scratch in a business they don’t fully understand. An example would be an ill-prepared entrance into the restaurant business where a former accountant suddenly decides to buy a bar without ever having worked in one. Avoiding this pitfall is easy, pick something that matches your expertise. This is a great time to employ the services of a business broker to help you figure out what businesses would be right for you in terms of how much you are looking to spend, what kind of hours you are willing to work, and what would suit your knowledge base.

Once you have found the right business, make a serious offer. Buyers who lowball sellers just to see how steep of a discount they can get will only end up insulting the seller past the point of no return.

Do your due diligence once you have a business that you are serious about buying, but realize there will be limits as far as what will be available to you. For instance, sometimes buyers ask for the same information over and over again, or buyers demand to meet all of the key employees before it is appropriate to do so. All this does is upset the seller. Lean on the expertise of your business broker to ensure you are getting what you need without unnecessarily overstepping your bounds. 

The moral of the story is you will need to be cautious (as you should be when you are making such a big purchase) but not at the expense of a great opportunity. Any business is going to come with a fair bit of risk. 

Are you thinking about buying a business but have questions about the process or what business might be right for you? Ask us! Leave us a comment or question here and we will be happy to assist you.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com