If you have been looking to buy a business, you know that a high-quality business, with a strong profit margin, owner benefit of over $300,000, repeat customers, good accounting records, etc., is very hard to find. Here are some tips to avoid shooting yourself in the foot.
- Listen and ask questions.
- When looking, consider the broadest geographic area possible. By over-limiting the area, you will limit the possibilities.
- Don’t disqualify possible targets too quickly. Remember that there is a limited amount of quality businesses. I have found many businesses that buyers would not have considered, but once they looked closer, they decided were a perfect fit.
- Browse the MLS listings printout provided by your business broker/intermediary yourself and look for businesses that catch your eye. Take your time; don’t be in a rush. Choose three or four of the best you find, for your broker to get more details.
- Don’t come in talking about all the changes you are going to make, especially in front of the seller. The smart thing to do is to change nothing for at least six months to a year and learn the business. Write down your thoughts as you go along and think about, then slowly implement, your changes after six months.
- Almost every quality business with an owner retiring is very concerned for their customers and employees. You want to give the seller confidence you will take care of them and you understand their importance.
- Consult with your broker about a “reasonable” offer based on the facts. By low-balling, you will in most cases end the conversation at that point.
- Get yourself pre-qualified for your SBA guaranteed loan and provide the bank’s pre-qualification letter or proof of funds with your offer. A résumé or bio of your professional background is also helpful.
- Communicate with your business broker/intermediary. With no or slow response, you are saying you are not a serious buyer.
Whether you’re a seller or a buyer, if you would like a confidential conversation about how to prepare, contact me on my cell, 954-579-4687, or by e-mail at firstname.lastname@example.org. I have been doing this for more than 45 years. Google Robert M Dolan and Dolan Sales, Inc. to see my reviews. My LinkedIn profile is at http://www.linkedin.com/in/dolansales