Tuesday, 31 July 2012
Disspelling myths for aspiring entrepreneurs
It doesn’t help matters that most business owners have never sold a business before, and very often, business buyers are on the market for the very first time.
Therefore, it’s important to dispel some of the common myths about buying a business.
The first myth is that a buyer is going to find the perfect business. Unfortunately, there are no perfect businesses. Buyers need to accept the fact that every business has faults.
The key is to find the right opportunity for you as a Buyer, and make it your perfect business. Once a buyer has decided to do this, the question then becomes “What business is the perfect opportunity for me?”
A second myth is that somehow delaying the buying process will yield a better result. Like any big decision the investigation and analysis stage takes time, as does the negotiations and eventual closing. However, delaying the process purposely may give another buyer the opportunity to swoop in and purchase the business right from under you.
The key to analyzing and negotiating is to make it a priority. Understand what risks you are comfortable with and what risks you are not. Then decide on the deal points that are most important. Negotiate hard for an agreement that you are happy with. Delaying with the motivation of tilting the table will likely only frustrate both sides and leave you unhappy with the result.
Another myth often believed by buyers is to look at businesses beyond what they can afford. It is common and advisable to sellers to offer financing to buyers to buy their business. It can mean that buyer with $100,000 can actually afford a business worth $250,000. It does not mean they can buy a $1,000,000 business. A buyer who overextends himself will almost guarantee failure when some unexpected problem arises.
The key is to get a solid understanding of your financial situation. While financing may be available, it is imperative that all aspiring entrepreneurs know how much money they are prepared to invest. Plus, and perhaps more importantly, how much they expect to make.
A business broker is a professional that buyers should turn to for assistance when deciding to buy. They can show the buyer a variety of businesses that are legitimately interested in selling and help them through the purchase process. With plenty of businesses to choose from in today’s market, it is more important than ever for buyers to make sure that their efforts remain focused on choosing the right business for them.
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.