“People should be less concerned with the difference between good or bad and right or wrong and more concerned with sense and nonsense.” – Carl Jung
Recently, I’ve written about a large number of people who dream about buying a business, yet only a small percentage of them actually do. According to an informal survey at our firm, it appears that less than eight percent of those who had intentions of buying a business ever did.
For such a big decision, a self-assessment should be made by those who think they want to buy a business. At the top of the list, buyers need to take an honest inventory of their skills, knowledge and interests. Are they comfortable with interacting with the public or more content behind a desk? What are the technical skills or talents that they can incorporate into business?
Related to this is the ability to articulate these talents to the seller to ensure the buyer’s credibility. If the seller is to entrust their company to a buyer, they must feel comfortable that the buyer has the experience, knowledge and capability to successfully operate the business after the transaction has been completed.
Another important part of a buyer’s assessment includes a thorough understanding of their financial situation. Buyers have to know how much cash they have as a down payment, how much in total they are prepared to invest, and how much they expect to make.
A buyer may have both credibility and the money to buy a business, but they also need the ability to “pull the trigger.” Buying a business is not for the faint of heart. A buyer must not be afraid to take a risk.
Nor should a buyer be afraid of responsibility. There will be a large number of people dependent upon the buyer. Employees, customers, vendors, etc. will all be counting on the buyer to succeed, not to mention to a buyer’s family members.
Something a potential buyer does not need to be too concerned with, at least at the outset, is the ability to articulate what type of business they are looking for. It is typical for buyers to know what they are not interested in, but not know what would be of interest to them. One of my favorite stories is the local mining executive who recently purchased a silk flower business – a business which would never have been on his radar when he began his search.
It is after the completion of an accurate personal assessment that an individual really knows whether they are a legitimate prospect to buy a business.