Business buyers often fail and the reason is they make some silly mistakes. They succumb to diseases which they can catch either before or after they buy.
Here are some of the more obvious diseases and the medicine that buyers need. Don’t you get sick.
1. Going Alone: Also know as ego. This is when you think you know everything.
Medicine: Get a good advisor on your side. The vendor of the business will have a business broker on their side, so why don’t you too. Level up the playing field. For the small cost you could save your house.
2. Familiarity: An acquaintance had success, so you assume that you will also succeed.
Medicine: Find the business that is right for you. Do your research and don’t assume you will copy your friend’s success. Don’t be jealous, make your own success.
3. Buyer Fever: You get the “buyer fever”: no common sense anymore – you just strike when the business is offered for what you think is a reasonable price. You think that if you miss it you are missing out on the deal of a lifetime.
Medicine: Say to yourself. There is always another deal, possibly better, around the corner.
4. No Research: You have a lack of information, not taking enough time for research or due diligence; not knowing why the business is being sold; not knowing what to look for.
Medicine: Spend more time asking the right questions of the business owner. Assume that the business owner knows more than you. Do independent research, not relying solely on the vendor’s answers to your questions.
5. Copycat: Buying the wrong business; picking the business someone else likes best.
Medicine: Don’t ask people’s advice about your choice unless they have a proven track record or they know more than you.
6. Easy rider. You think it will be easy. You put a deposit on the BMW before they you how to drive it.
Medicine: No business is easy in the first twelve months. This is the make or break time. Knuckle down and be prepared to lose clients, customers or staff. Then you won’t be disappointed.
7. Finance Blues: Going into serious debt & underestimating the need for ongoing investment and working capital.
Medicine: Get the right financial/business advice. Not every accountant knows about this stuff.
8. Changing things. You think you know better than the last owner. You change things, upsetting customers, staff or other stakeholders.
Medicine: Don’t change anything in the first twelve months unless it is absolutely necessary.
9. Wrong Fit. You pay too much attention thinking about the profit and what you should pay, rather than the proper question of whether you are right for this business.
Medicine: Get advice on business valuation, while you pay more attention top the non-financial aspects of the business. Put the two together and there’s your answer.
10. Job Blues. You buy a business because you hate your job.
Medicine: Find out why you hate your job. Is it you or the job. If you fail at work, you might fail in business. Plenty of people succeed in business where they were just not good employees, but if you are wrong and the fault lies with you, you could lose a lot of money finding that out.
11. Rainbow Syndrome. You think that you are going to find a pot of gold at the end of your rainbow. This can lead to impulsive decisions both before and after purchase.
Medicine: Have patience and make your first goal to make an income, not a fortune.
12. Rose Glasses. You think the problems will all work themselves out after you own the business, so you blind yourself to their importance.
Medicine: Take off your rose glasses. If the problems were there beforehand, they will probably multiply when you have the added stress of running the business.