Choosing A Business

In my first post on this blog, I talked about the

three traits common to every successful entrepreneur I have met. The first characteristic was perseverance. The second is that all great entrepreneurs are smart enough to know they don’t know it all.

Three entrepreneurs whom I know well and who have a combined net worth of over $100 million really stand out. As I got to know them better over the past years, I was always amazed how they were the first to admit when they did not know something. Whenever they evaluated a situation, or potential acquisition, they immediately did two things: One, they gained access to, and devoured as much information as humanly possible on the subject. They searched online, subscribed to journals, and purchased books on the topic. Then, their inclination was to find out who the best person is in the industry was whom they could hire to provide consulting work to them.

When I first started out in business in 1990, I must admit, I did not hire top notch people. Part of the reason was I couldn’t afford them, but in looking back, I think I may have been just a bit insecure to have an employee who knew more than I did. I hate to sound egotistical, but as I became more successful, and gained more confidence in my own ability, it was very easy to stand on the sidelines and let the specialists do their job. There’s no doubt that my businesses grew meteorically after I began to surround myself with people that were bigger, better, faster, and smarter than me (the last one wasn’t too hard).

No matter what business you ultimately get into, make it a point from day one to be influenced by the best people possible.

Also, if you’re going to attack a new project, develop a new line of business, consider expansion, or look at doing anything where you’re less than an expert, then get informed. There’s no shame in recognizing what you don’t know. Actually, the opposite holds true – ignorance is a curse. In fact,

the greatest strength you can have in business is knowing your weaknesses.

OK, so how does this relate to buying a business?

It’s simple: get informed, hire the most experienced professionals possible.

Don’t look to save a few bucks hiring your cousin’s brother the patent attorney to handle the transaction – that’s not their expertise. Engage an accountant who has analyzed and conducted due diligence on similar type businesses. If you have a sprained ankle, you don’t visit the dentist. Lawyers and CPAs have their own specialties. I see this everyday, especially with foreign buyers; they let their immigration attorney handle the business deal – dumb, dumb, dumb!

If this entire process is new to you, then get hold of the right information. Don’t fool yourself – there’s a lot involved in buying or selling a business.

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