As part of running a business brokerage firm, I frequently meet with first-time entrepreneurs interested in buying a business.
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Almost everyone I meet has had a dream of owning their own business for the obvious reasons -- fulfillment, security, monetary rewards, flexibility, etc. Oftentimes, there are romantic notions associated with owning a business -- if only it were that easy!
As responsible business brokers, our job is not to help people achieve their dreams as much as it is to make sure their dreams are achievable and, for that matter, desirable. In a nutshell, our job is to get buyers to be realistic about what it means to own a business and try to help them to find the business that is the best fit for them.
If you buy the right business, there will be romance. You'll own a business where you'll want to head off to work each morning. Pick the wrong business to buy, and your life can become a living hell.
Things to Consider When Deciding To Buy A Business
So is buying a business right for you?
There are some advantages when it comes to buying an established business that can make it particularly appealing for the first-time business owner. The business could be established with a reliable customer base, employees are in place and many obstacles may have been overcome already. Furthermore, you may be experienced in the field you're looking at--perhaps some people consider you an expert--so drawing new business will not prove difficult.
On the other hand, buying an established business can be expensive and may require an additional infusion of capital to keep it running smoothly. To be sure, owning and running a business takes more work than punching a clock for someone else.
When we meet with buyers, we walk through an elaborate assessment process to help them determine whether business ownership is right for them and what type of businesses they should consider purchasing.
Inherent in our process are a few fundamentals that every would-be entrepreneur should keep top of mind:
- You should only buy a business if you can find a business that suits your strengths. What skills do you bring to the table? Are you a "people person" who likes dealing with customers? Or, maybe you have a knack for manufacturing goods.
- Understand what you are willing to invest before you start shopping. How much money are you willing to spend on buying and building your business? If you don't have a lot of capital--or access to a lot of capital--that could limit the scope of your possibilities.
- Do your homework. How well do you know the industry you plan on joining? If you've worked in a related field for a long time, that will help. If you're new to a venture, read as much as you can, visit similar establishments and ask a lot of questions. You'll find people are surprisingly helpful when you ask to talk about the ins and outs of their business.
- Define your salary requirements. Do you know how much money you want to make? How hard are you willing to work for that?
- Make sure you are willing to work very hard. Owning a business is not a 40-hour a week job. You will spend hours on marketing, managing and miscellaneous paper work.
- Never buy a business without doing your due diligence. Find out why a business is for sale. Is foot traffic poor? Is parking hard to come by? Maybe it's a good business but suffers from a bad location.
Finding the Best Business For You
If you decide to move forward with buying a business, how do you determine what type of business is right for you?
I can't answer that for you, but start by understanding your motivations and hot buttons.
You need to have a passion for the work. If you're not prepared to spend most of your waking hours thinking about how to better run your business, you won't succeed.