A few years ago we did a survey with over 1000 prospective business buyers classified as those who were actively searching to buy a business.
One of the questions we asked was to identify the single biggest concern they had. The answer choices were: finding the right business, getting a good deal, arranging financing or not finding out certain issues before closing the deal.
Before revealing the results, what’s your single biggest concern from the choices offered?
Back to the survey; the results were shocking: 74% of respondents identified finding the right business as their number one concern.
Although I certainly expected that to be the most common answer, I didn’t anticipate such a lopsided percentage and, I was very pleased.
The daunting thing about buying a business is you cannot afford to make any mistakes.
Obviously, you do not want to make too many mistakes, however, if you only do one thing right during the entire process, make sure you buy a business that’s perfectly suited to your skills. The thing is, no matter how successful you are at the other stages in the business buying process, if the business is not right for you, you’re going out of business.
For many people, identifying the right business is like hunting at night. And, to a certain extent, it’s a good analogy.
There are three critical aspects to be considered to be certain you buy the right business.
First, whatever it is that you do best has to be the single most important driving factor of the revenues and profits of any business you consider purchasing. While it’s wonderful to fantasize about owning a certain type of business (i.e. restaurants and bed and breakfast joints are the most common hallucinations), if your skill set does not match what that type of business needs most, your endeavor will fail – guaranteed!
Second, do not confuse experience with skill. Just because you have been in a specific sector does not mean that’s where you have to remain. Further, while you may have a level of expertise in that area, that alone isn’t skill. It’s far more important to understand your greatest skill set, as that talent can be applied to almost any industry.
Finally, do not get overly concerned about entering a new industry. Generally, with any level of common sense, the industry can be easily learned. Plus, it’s always fun to learn a new industry (at lease I think so – I actually find that to be the most fascinating aspect to buying businesses). As long as it’s not a highly specialized industry that takes years to learn, you’re going to be fine.
If you’re really stumped, here’s what to do:
1. Identify some broad categories of prospective businesses (you may want to first eliminate what you don’t want).
2. Contact and visit with at least two sellers in each of the categories you initially identify.
3. After you’ve met with 10 sellers, your ideas will begin to crystallize. If not, PLEASE let me know and we can review what you’ve done and learned and can better focus upon what business(es) make sense for you.
The key to all of this is for you to focus upon your strengths and the adaptation of these to the right business.
In other words, what is it that you do best – specifically? Once you nail that down, identifying the right business will be easy.