I have always believed that buying a business requires a delicate balance between logic and emotion.
While some would believe that emotion has no place in a decision this important, I disagree. I want to discuss this side of the brain today, and next week I will address the logical perspective.
Emotion does in fact play a very important role when buying a business, and mostly from a standpoint of motivation.
Certainly, you cannot allow emotion to dictate the decisions that have to be based upon logic. And sometimes, you cannot let logic overtake your decision making process when emotion is required. Most importantly, you need the know-how to separate the two, and to recognize when either state may be impacting your decision-making process altogether.
There are four specific areas when you need to defer to the emotional side:
Scenario # 1 – Your Quest For Something Better
The bulk of your reasoning behind buying a business should be driven by the fact that you want something better in life.
You have to reach the point where you say “enough is enough” – it is your turn now to be the boss. You have to get excited about the potential rewards you stand to gain from owning your own business. While everyone has their individual reasons, certainly controlling your own destiny, making more money, having the opportunity to improve your quality of life, and helping others, are just a few of the common reasons. These are all things that most people hope to achieve. Unfortunately, hope just gives way to dreams; only knowledge can guarantee your success. And so you need the hope to stay motivated, but your quest has to go beyond that if you are really serious about this initiative. Becoming a well-prepared and knowledgeable buyer is the key to your success.
Scenario # 2 –Keeping The Faith
You absolutely need the emotional side in order to stay motivated; especially in this economy. I would bet that if you tell ten friends that you plan on buying a business now, probably every one of them will tell you that “you’re crazy – this is not the right time”. Here is the thing: most people do not have the nerve to be in their own business. But to be successful, you cannot be like most people. Enterprising individuals need to cut a new path to gain success. No, you do not have to be a pioneer, and you do not have to take ridiculous risks either. Rather, you need to forge ahead and often times when the naysayers are stacked against you. Chances are these same people would have the same negative feedback regardless of the economy. Business ownership is not for everyone, and it is definitely not for the people that discourage you. But if you know in your gut that you were meant to be in your own business, these are not the people you should be relying on for guidance anyways.
Scenario # 3 – Focusing On The Finish Line
There are going to be times during the business-buying process that you will be knocked off track. You will face situations where deals fall through, you will find it hard to locate any decent businesses for sale, actual financials are not close to what you were told, or you uncover too many problems during your due diligence. These scenarios, plus many others, often surface after you have invested a lot of time, effort, and yes money, to analyze a business. You must have the strength to dust off these little setbacks and carry on towards the finish line.
Interestingly enough, this is also where emotion can play havoc on a prospective business buyer. On the one hand, you want to stay upbeat and committed to the goal. But, you also need a good dose of logic because you cannot move forward with the wrong deal simply because you have invested a lot of time in it. Ill-prepared buyers do this all the time and despite their internal warning signs not to close the transaction, they do so anyways, and they always pay a big price later on.
Scenario # 4 – Doing What You Love Is Really Overrated
Yes, I am going to take a lot of heat for this one but I don’t care. When someone tells me that they will only buy a business that is based upon something they “love to do”, I want to vomit! This concept is completely ass-backwards. Let me be very clear: You do not know what you are going to love in a business, and you cannot possibly love a business before you buy it.
I see this all the time in people that hallucinate about the quaint lifestyle of buying a bed and breakfast for example. After cleaning toilets, working 100 hours a week, not knowing how to increase occupancy, or catering to complaining clients, they learn to hate it pretty fast. Or, there are those who love to cook and think they should own a restaurant. Well guess what; your skill as a chef does not on its own, qualify you to be a successful restaurateur. Lastly, it is evident in those who fantasize about turning a hobby into a business. It almost never works, and you will likely end up hating your hobby altogether.
Find anyone who loves their business and I guarantee it is because they are successful. Their joy emanates from the results they have achieved from the business, and from the daily challenges it brings and the sense of accomplishment they get from turning them into successes. I fit into this category. Yes indeed I love the business of buying businesses and I get incredible joy from helping buyers, but if my company was not profitable, there is only so long I could stay grounded to that ideal. Rest assured that every successful business owner will mirror my sentiments.
The lesson here is simple: you have to do what you are good at, and apply that specific skill to the right business to buy. Then, as you leverage your talents and grow the business into an even more successful venture, and derive all of the benefits we discussed earlier, you will find yourself loving what you do each day.
And once you get to that emotion, you will realize that you no longer even consider it work. That is what is really meant by doing what you love.
Today’s article ties into the topic of figuring out what is the right business for you. There is a very popular article on my website that takes a deeper look at this subject which you can read at: http://www.diomo.com/the-right-business-for-you.html