Tuesday, 27 March 2012
Sometimes, you have to kiss a few frogs to find a princess
I often talk about the number of buyers who are looking for good companies to buy in Southwestern Ontario. However, at the same time, I mention an informal survey among associates which indicates less than 5 percent of those who had intentions of buying a business ever do.
Why is it then that some individuals actually purchase a business, yet the vast majority do not?
There are many reasons for this….
A buyer may have unrealistic expectations regarding the price of a business. I can’t believe the times I have seen a potential buyer’s chin hit the floor when they realize the financial investment it takes to purchase a good company with positive cash flow.
Related to this is the misconception some buyers have about being able to buy a business while they continue to be employed at their current place of business. This is like babysitting a 2 year old while napping.
Even though buyers may often have an urgent “need” to buy a business, they lack the courage to take the “leap of faith” necessary to go through with the sale. Like a lot of things in life, it’s easier to talk about doing something than actually doing it.
Also, a recent financial setback can impact a potential buyer’s ability to consummate the deal.
A family crisis, a significant other’s loss of a job, a bad quarter in the stock market, etc. can impair the buyer’s ability to raise the necessary capital.
Sometimes, it’s not even the buyers fault as outside influences can also hamper the successful transfer of a business. For example a buyer may receive well-intentioned yet overly aggressive advice from outside advisors.
Although anecdotal, it is difficult to find a buyer’s accountant who felt that their client didn’t pay too much for a business. Conversely, seldom have we come across a seller’s accountant who felt their client sold their business for enough money.
Lawyers can also influence a deal. While working to protect their client’s interests, at times, lawyers need to be reminded to work toward the goal of putting the deal together, not build roadblocks to derail it. After all, their client’s fundamental goal is to sell their business.
One of the main reasons why sellers should consider turning to a competent business broker for assistance when deciding to sell their business is because of the minimal amount of prospective buyers who actually become owners.
A professional facilitator means the seller can continue to maintain their focus on making the business as profitable and attractive as possible while the broker separates the real buyers from the wannabes.
Do you have small business questions you would like answered about this article or others? Please visit www.VRWindsor.com or call 519-903-7807.
William Sivell is a sales representative of VR Windsor Inc., Business Brokerage; his blog appears every Tuesday.