For many entrepreneurs, buying a business started by another individual is a completely new experience. Even more experienced individuals, though, often allow their judgment be clouded by unfounded buying myths. These myths make it even more difficult for prospective buyers to determine whether a deal is worth their time, and they can significantly decrease a buyer’s chances of working out a successful deal. Learn to recognize these myths, and avoid letting them influence your actions as a buyer:
Now’s not a good time to buy a business.
This is one of the most common myths preventing buyers from entering into otherwise profitable business deals. In actuality, though, the time during and immediately following a recession may be one of the best times to purchase. Some of the country’s most successful companies, including Burger King and Microsoft, were started during times of economic downturn.
While some business areas are definitely more likely to be successful during tough economic times, generally speaking, buyers purchasing during a recession have a wide range of choices available at bargain prices.
Money is everything.
Many inexperienced buyers focus solely on a business’s finances to determine whether or not they should purchase. This is a mistake because while money is certainly a huge factor in your decision, it’s important to realize that not all purchases result in instant wealth. If you enter into the world of business buying and selling with the expectation that you will be able to immediately and substantially boost profits, you’re likely in for a rude awakening.
Just as business startups require time and effort to become successful, so too do business acquisitions usually require a substantial investment on your part. But that doesn’t mean that you shouldn’t purchase. Most business owners claim that the best part of their job is not money-related at all; rather, these individuals cite independence and the ability to determine their own hours, wages, etc. as the main benefit to being a business owner. So the ability to use your skills to substantially boost a business’s profits should be considered a bonus, not a main goal.
Negotiating will be easy.
A huge number of otherwise well-thought-out business deals die on the negotiating table, and this is partly the result of inexperienced buyers underestimating the difficulty of negotiating with the seller. So before you attempt to negotiate, understand that for better or worse, most sellers are very emotionally attached to their businesses. This might seem unreasonable (and in many cases, it is), but many sellers are unable to separate their personal feelings from the sale of their company. So some sellers are suspicious. Some get offended by routine questions. Some are unwilling to budge on unreasonable terms. And some seem like they’re trying to scare off buyers intentionally.
Because of this, negotiating a successful sale often requires the help of an experienced business broker, someone who can act as a middle man between buyer and seller, helping to diffuse the distrust that often arises between the two parties.
If you are considering acquiring a business, don’t fall victim to the myths above. The economy may still be struggling, but many experts agree that now is as good a time as ever to make a purchase. Also, if you’re truly committed to being a business owner, understand that most owners never become millionaires off of their ventures. Finally, it’s important to recognize that negotiations will probably be more difficult than you’re anticipating. Professional negotiators and brokers exist for a reason: because most people simply do not possess the expertise necessary to work out a successful deal on their own.
The Tenney Group
As professional transportation business brokers, The Tenney Group has been helping buyers and sellers negotiate mutually beneficial deals for several decades. The Tenney Group brokers regularly assist with limousine & chauffeured businesses, busing companies, trucking firms, emergency & non emergency transportation companies, and other land based transportation companies.