If you are someone who is interested in buying a business, you are looking for a profitable business that has a good share of the market and a great location. You are not going to be willing to buy a business that is on the fast track to failure and bankruptcy, so as you begin searching for businesses you may have pondered the question…
Why would anyone sell a perfectly good business?
This question is a very important one to ask as you search for businesses, and it is a question that any business seller should be willing and able to answer. If you are unable to get an answer to this question from a business owner, this is a major red flag. Most reasons for selling a business have very little to do with the business itself. A large percentage of the time a business is on the market because of the personal life of the owner.
Let’s look at some reasons for selling that have more to do with the owner than with the business:
Retirement. This one goes without saying. An owner who is ready for another chapter in life is willing to sell a perfectly good business so they can move on.
Divorce. When husbands and wives are partners in a business, sometimes the business gets sold as part of the divorce.
Partnership disputes. Most partnerships start well, but not all end that way. If there is a breakdown in a partnership where both parties want out, it can mean putting the business on the market.
Medical reasons. If the owner or a member of their family has a medical condition that will take precedence over the business, or will keep the owner from being able to run the business, the business will likely end up on the market.
The kids decided not to follow in the family footsteps. Many small business owners have their children work with them in the business, but when the time comes for mom and/or dad to retire, sometimes the kids want to do something else.
There are many reasons that a perfectly good business ends up on the market, the key is to find out the real reason the owner is looking to sell. If the reason has little to nothing to do with the business itself, then you are looking at a potentially great business acquisition.
Are you looking for a business to buy, but have come across many that seem too good to be true? Do you have questions about how to find out the real reason a business is for sale? Ask us! Leave us a comment or question here, and we look forward to working with you on your road to business ownership.