Many people dream about one day owning and running their own business. The lure of being your own boss or the captain of your own destiny sounds great, doesn’t it? Truth be told, it absolutely can be. While some entrepreneurs look to start their own businesses from the ground up, many potential business buyers are looking for a more turn-key solution to starting their own companies. One of the easiest ways to do this is to purchase a successful business outright. However, buying a business is not like buying a house or a new car. According to industry statistics, an estimated 9 out of 10 potential business buyers never complete their transactions. This could be down to a number of reasons, but for the most part making one or more of these mistakes can certainly put you off the path. There are many potential pitfalls that you can easily avoid if you’re willing to devote the time and effort. What are some of the biggest mistakes that new business buyers make during the process?
You haven’t done your research on the business you’re interested in
Let’s say you’ve been in marketing for the last decade or so, but your dream has always been to run a restaurant. Having been a food runner or a waitress back in high school will rarely prepare you for the actually day-to-day details that you will be required to know as a restaurant owner. There will be certifications that you will need to take, hiring procedures to put in place and a phone-book sized pile of paperwork that you’ll be required to fill out for health and safety codes. Knowing what you’re getting into before you even put a bid on a business can save you a lot of headaches down the road. Devote yourself and your free time to speaking to other business owners in the field of your choice and read everything you can so you’re totally familiar with what you’ll need to do. The more you know, the more likely your new venture will be a success.
The type of business you’re looking at doesn’t play to your strengths and experience
When you decide that you’d like to move into buying your own business, it’s a good idea to do a very frank and realistic self-assessment of your strengths, skills and other elements that you have at your disposal. Listing these out can help you assess if the particular businesses you’re interested in are correct for you, and can also help you narrow down the potential list of companies that you’ll excel in. This does not mean that you have to buy in to a company that’s exactly like the job you’ve already been doing, but it does mean that you need to look for qualities that will be helpful to your new business, as well as any potential drawbacks where you may need to hire specialized staff.
You try to handle the process of buying it yourself
Even if you’ve done it before, buying a business is nothing like purchasing a house or a car. There are multiple things to consider, such as how the company’s current financial books look, marketing efforts and brand recognition amongst other things. While having a qualified attorney to help guide you through some of the contractual elements of the process is essential, using a service can also be crucial to ensure that you’re getting all the information you need to make an informed decision. They can also handle negotiations on your behalf, which can usually give you a better deal than you would have been able to pull in yourself. In business, as in life, surrounding yourself with the right people can ultimately lead to your success.
Your financial ducks aren’t in a row
You’ve got the passion and the drive, but ultimately it comes down to the biggest thing in business: cash. At some point, you’re going to have to present your finances and credit scores so you’re able to confirm the deal. Unless you’re independently wealthy, chances are you may also need to work with a bank for a business loan of some sort. Having a business plan is also an essential element to your financial pie. By showing your lenders your targets and how you aim to achieve them, you put yourself in a much better position to secure the financial capital you need to make your business dreams come true.