Why Don’t More People Buy Businesses?

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Why More People Do not buy a business?

Introduction

You may not believe what they say yourself, but if you have been in the business of buying businesses for a long time you’ve heard someone repeat this time worn statement.

“One in 14 buyers actually buys a business.”

The business brokerage industry throws around this number all the time.

This “1 in 14” number (or only 7% ) is based on statistics gathered from some old-time brokers. They must have actually kept track of how many buyers called their firms versus how many deals they closed. We can’t know how well they tracked this info, or where this data originated from. But, thankfully, the actual number is not the important part. For the sake of solving the problem, we just need to see that it’s low, and really could be better.

Here’s why that number stays so low…

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A Fresh Way to Find a Business to Buy

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In my seminars, I have been talking about the various options to people that want to own their own business.

They are:
A. Start a business from scratch and build it slowly while maintaining your existing job.

Doing this allows you to learn all about the industry you are going into. There will be few surprises by the time the business hits its break-even point. Look at all the people that go on TV shows to raise capital for their expanding business. They have a solid direction, and will succeed if they have good business basics.
B. Buy an existing business that claims it is making a profit level that you can support your family and your life planning. Read more

Business Valuation Pitfalls: How to Qualify for Financing

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The financing of a business is a relatively straight forward process, if you are aware of what lenders are looking for and generally what they will and will not do.  They will be looking at your credit, your experience and the sort of down payment you have and information about what sort of note the seller is willing to take back when selling you the business.  Read more

Introduction to Due Diligence: How to Evaluate the True Worth of a Business: Due Diligence 101 or What You Don’t Know Can Kill You!

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This article is written as a general discussion on the subject of Due Diligence and how to evaluate a small business for purchase. It is for informational purposes and not intended to be a definitive guideline for your exact situation. You should consult the appropriate professionals with regards to your specific transaction or situation. Further, this article is in no way advocating, suggesting or implying that anyone engages in any type fraudulent activities whatsoever. These are simply things a buyer should be aware of when doing Due Diligence in buying a business. Read more

Business Appraisal Pitfalls: How to Evaluate the True Worth of a Business:The Differences between a Busines

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It has been said that you cannot judge a man until you have walked a mile in his shoes. Over the years I have done all four functions when someone asked me to help them.

But since setting up Due Diligence Assistance for buyers six months ago I have gained a whole new respect for what knowledgeable CPAs have to work with when assisting their clients in buying a business. With very limited information they must determine if the books are cooked (false and incomplete) and if they are, by what amount.

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Business Sale Price Pitfalls: Should you knowingly overpay for a business?

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 I remember growing up hearing from sellers the following sales pitch for why I should pay them top dollar. “You can get fresh oats for a fair price or you can get oats that have gone through the cow for a lot cheaper.” The other one I heard was “Quality remains long after price is forgotten.” After 20 years of being a business broker, I have heard every justification in the world for why this owner’s business is special and deserves a price at top market. Read more