Question:
I’ve been having a hard time getting brokers to respond to my inquiries on their listings, and I think it’s because I am very young (22) and have never bought a business before. But I am very serious about buying a business and confident I will be able to come up with the money through my family. My question is: how can I present myself better to get the brokers I’m talking with to take me seriously and recognize that I am committed to buying a business?
Answer:
I believe that the issue here is far less related to your age than it is to the financial aspect. Business brokers are typically inundated with inquiries for good businesses. Moreover, the vast majority of people who look to buy a business never do so, for many reasons. That is why it is imperative that you distinguish yourself from the crowd, and your age is not the problem here. Imagine if you were a business broker and received your inquiry. If they do not get a sense that you have the financial ability to complete a transaction, you could not expect them to spend time with you. Whether you subscribe to this philosophy or not, it’s reality. Therefore, your best strategy is to take a step back and secure the necessary financing before you dive into this process.
Now, you may be saying: how can I get financing lined up if I don’t have a business?
And here I am telling you that you probably can’t secure a business, or get sellers or brokers to take you seriously, until you get financing.
While this may sound like a vicious circle, rest assured that it’s not. Wherever you intend to obtain financing, you can “pre-arrange” it in effect. If, for example, you are planning to get the money through personal relationships, then have those individuals provide you with a letter from their CPA attesting to their net worth, along with a letter confirming that should you secure a business opportunity that meets their criteria, they will be prepared to provide you with up to X dollars in financing.
You should be prepared to present this documentation to brokers/sellers when the subject of how you will be able to finance the deal comes up, and it always will.
Furthermore, it simply makes sense from your own perspective to know what you will be able to secure so as to not waste your own time on potential businesses you can’t afford. Or worse, to spend your valuable time looking at businesses only to learn that the people you anticipated lending you the money are no longer willing to do so.
I work with many buyers as well as sellers in my business brokerage career, and the two things that I need to understand from the buyers before we get busy are:
- Their strengths, weaknesses, and experiences in order to assist them in finding the right business.
- How much they have available to invest. This point is one that I really drill down to because the last thing I want to do is to invest my time only to learn that they cannot execute the transaction financially.
While I appreciate your initial comments that you are confident about getting the money, it just makes good sense on every front to know going in what you may have available and being able to prove that will immediately remove any apathy on the part of any business broker. They want to deal with serious buyers as badly as you want to convey that you are one.