Choosing A Business

One of the biggest challenges when buying a business is deciding what type of business is right for each individual. A few years ago, we conducted a survey with a sampling of just over one thousand prospective business buyers and 74% indicated that finding the right business was their top concern.

Many people believe they need to stick with a specific industry where they have the bulk of their working experience. This is a natural conclusion however, it’s not the right strategy.

The industry is secondary. You can always learn about a new product or service however, trying to ramp up a new skill is very difficult in any situation and definitely not what you want to be forced to do as a new business owner. In other words, you do not want to buy a business and be forced to learn a specific skill in order to run it successfully.

In fact, the complete opposite strategy is what you must employ: whatever it is that you do best must be the single most important driver of the revenue/profits of any company you consider purchasing. Repeat.

So what is it that you’re best at doing? Where does your expertise lie? Is it sales, operations, logistics, human resources, or some other area?

I cannot over emphasize just how important it is for a buyer to identify this one key skill. Failure to do so will either result in you never buying a business or buying the wrong one.

Take the time to perform an honest self assessment. Also, speak with past colleagues and employers and get their feedback.

Don’t try to be something you are not – you’re only fooling yourself if you take that approach.

Once you have identified your best skill set, that’s when you can start looking at businesses for sale. However, there still can be a weeding out process since numerous business types may fit your strengths.

A good approach to finding the right business is:

* Identify some broad categories of prospective businesses (you may want to first eliminate what you don’t want).

* Contact and visit with at least two sellers in each of the categories you initially identify.

* After you’ve met with 10 sellers, your ideas will begin to crystallize.

* Narrow down the categories to one or two.

* Focus your search accordingly.

To insure your success when buying a business, you have to purchase one that will grow from your strengths and not suffer from your weaknesses. Remember, whatever it is that you do best MUST be the driver of the business!


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