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How To Buy The Right Business For You
By Richard Parker, President of The Business
For Sale Buyer Resource Center™ and author of
the most widely used reference resource and
strategy guide for buying a business for sale –
How To Buy A Good Business At A Great Price©
According to industry statistics, over 90% of
the people who begin the search to buy a
business NEVER complete a purchase!
The only way that you'll avoid being a
“90-Percenter” is by acquiring the right
knowledge. Likewise, the only way to ensure that
you will be successful in the business is to be
absolutely certain that you buy the right one.
Don't be alarmed, most people have no clue
what business is right for them. The number of
businesses for sale can be daunting; the choice
is enormous.
There are many proven steps that can help you
determine what is the right business for you.
Develop YOUR Golden Rules:
Put together your list of five golden rules
of what any business you buy MUST have in place.
Think about this and be specific. Don't say: " I
have to enjoy what I do"...sure that's
important, very important in fact. However, if
you're in a business that you initially think
you're going to love, but you find yourself
losing money, I can assure you that you'll learn
to hate everyday very quickly!
As an example, here are my five golden rules
for any business I consider buying:
Rule # 1: It must be a sales
and marketing-driven business - that's what I do
best.
Rule # 2: It must have some
element of exclusivity either in the product or
within a territory. If not, I have no point of
difference to offer new clients and maintaining
current clients will always be a risk.
Rule # 3: The product or
service must be a high-margin item -this way,
it's simply a matter of time, persistence, and
sales savvy (my strength) for me to build the
business. Plus, the margins will allow me to try
new, creative ways of building the business.
Rule # 4: There must be a
built-in demand for the product or service. I've
learned the hard way that trying to create
demand is far too expensive.
Rule # 5: I do not want to
sell anything that competes solely on price.
There's no long-term viability in that business
model.
These are my rules. Unbreakable.
Non-negotiable - no matter what! Guess what?
They are bulletproof. When I find a business
with these in place, and there are plenty, I am
always going to be successful. You can certainly
follow mine however; it is far more important
that you tailor these to your specific strengths
and situation.
I must admit that I do have a sixth and
seventh rule, but they are negotiable: I like
businesses that don't have a lot of employees
and I prefer, if possible, to have a business
where there are repeat orders from all clients.
But again, I will sway from these two but never,
ever from the other five.
Helpful hint: you probably won't come up with
five today. Your list may even change a bit
during your search. As you visit different
businesses, speak with sellers, and conduct your
research, you may discover certain things that
are added or deleted from your list. That's OK.
However, getting this list down pat as soon as
possible is fundamental to your success!
"Whatever It Is That You Do Best..."
Next, get a true grip on your skills. Don't
pretend to be something that you're not. The
rule here is: “Whatever it is that you
do best (sales, marketing, operations,
manufacturing efficiencies, managing employees,
customer service, selling to
businesses/consumers.), must be the single most
important driving factor of the revenue and
profits of any business you consider purchasing”.
Repeat the last sentence once again; it holds
the key to your success!
With business ownership, one of the main
goals is for you to control your own destiny.
Don't put yourself in a position where if one
employee leaves, you're in big trouble. Your
skills must be the fuel that drives the engine.
The right business for you is one that will
thrive from your strengths and not suffer from
your weaknesses. Take a long, hard look at
yourself. Picture yourself in the business. Of
paramount importance is that you must perceive
yourself as enjoying the business. If you can't,
then there's just no way that you can be
successful. The business that you choose has to
be one that you'll be proud to own.
Fall In Love With The Profit - NOT The
Product!
Another key factor is to avoid falling in
love with the product; rather, you must fall in
love with the profit and the lifestyle that it
can deliver to you. Many buyers begin to dream
about all of the exciting things about the
business and they become delusional about what
can realistically be achieved. The product that
the business sells, or the service that it
offers, unless offensive in nature, is
meaningless in the overall scheme. If the
business does not produce the income you need,
or provide you with a satisfactory return on
your investment, then rest assured, you will
learn to detest the product quickly.
Likewise, a bland, boring product line can
become very attractive if the business is
growing and you're enjoying the work.
Stay Focused - Don't Get Discouraged
During the search phase, it's easy to become
discouraged by the vast number of available
businesses. Don't get overwhelmed. Approach this
methodically. If necessary, rule out the ones
that you don't want. For example, if you're not
interested in a gas station, restaurant or
convenience store, you'll rule out 50% of all
online listings. Search through listings paying
attention to the profits, not just the asking
price. Understand that listings do not always
portray the whole picture. Send inquiries to the
listed contact. Arrange meetings with sellers.
Prepare the questions you need to ask. You
cannot buy a business from a listing. Visit
businesses. With each meeting you'll get closer
to knowing what is and isn't right for you.
Above all, get into the game. Once you own
the right business, you'll never look back!
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