Buying a business is a journey. Along the way you will learn a few immutable truths; some obvious, some not. Here are the 13 things I learned while buying my business.
1. A broker’s job is to sell a business, not be a business man (or woman).
A broker is a sales person. Stop. They are not your friend, have no obligation to you, and their goal is to sell the business and take their commission. Their job is not to do diligence, vet deals, and make sure you, as the buyer, make a good decision. This is not to say that there aren’t great brokers who preliminarily vet deals to make sure they are selling something worth a cent. These men and woman are a rarer breed but they are out there. Start with the people on my list and work out from there.
2. Good deals don’t last
Create a set of filters which you will use to vet deals. Know what a good deal for you looks like. When you see it, strike without hesitation.
3. Do your diligence / Beware of Scams
Caveat Emptor. Be careful and make sure the business is legit. If you are new to this business, do not mess around and pay an expert for help. There are a lot of scams and if something smells wrong, run. If it’s your first rodeo and you see something wrong, imagine how bad it really is.
4. Have logic when making an offer
This is really business 101 but if you really want to buy a business, act like a businessman/ woman and figure out a sound reason you are offering what you are. It may get rejected but at least you won’t be a joker.
5. The process takes a while
End to end it was 140 days for me. This including initial discovery, LOI, diligence, negotiation, and closing. It took me a bit longer because of the SBA and a no clue period but no matter what would have been 75-90 days. If I included when I started looking for a business, it was 6.5 months.
6. Don’t be a jerk
This is a sellers market and they don’t have to sell to you. You gain nothing by being a jerk or a tough guy.
7. Be ready for some strange feelings
It is a weird feeling sending a hell of a lot of money for some code and passwords. Be prepared to have some anxiety that a meteor strike will take out the internet. Ridiculous but emotions aren’t logical.
8. Sales will not stop the day you take over.
If you did your diligence, everything will be fine.
9. Traffic will not dry up the day you take over
10. Have a plan BEFORE you close on the business
You will be too busy figuring out operations to think through a plan. Life will be much easier if you have a playbook.
11. Get a network
Meet people who run these types of businesses. It’s isolating, lonely, and you can avoid bad decisions if you have experts around you.
12. Have money in the bank when you start day 1
I didn’t learn this but it’s a piece of advice. You can’t grow a business if you don’t have cash to invest in it.
13. Have fun
You bought a business to enable you to have a lifestyle. Enjoy your freedom.