Finding the right business to buy is one of the most frequent questions Michael Shea hears as a business broker. While many brokers offer personal preferences, Shea argues that the “best” business is defined by its ability to mitigate risk and prove its value through hard numbers 00:18 Opens in a new window .
Below are the key fundamentals to look for when evaluating an acquisition:
1. Longevity and Established Industry
The best businesses have stood the test of time and survived multiple economic cycles 00:31 Opens in a new window . Avoid “flash in the pan” trends—like the sudden explosion of multiple yogurt shops in a small radius—which often disappear as quickly as they arrived 00:47 Opens in a new window . Look for industries where consumer need is consistent and long-term.
2. High Transaction Volume and Strong Margins
Risk is mitigated when money flows through a business via many different customers rather than a few large ones.
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Avoid Concentration: A business shouldn’t rely on a single transaction to drive its revenue 01:10 Opens in a new window .
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Watch the Margins: Stay away from businesses with slim margins that are vulnerable to small spikes in costs, such as fuel price fluctuations for route-based businesses 01:43 Opens in a new window .
3. Scalability Beyond Local Borders
A business that relies solely on local foot traffic has an inherent ceiling on its growth. Shea prefers models where you can expand your sales platform through networking, digital marketing, or removing geographical limits 02:10 Opens in a new window .
4. Proven Business Models
Why reinvent the wheel? Buying into a successful, proven model—including certain franchises—removes much of the guesswork 02:49 Opens in a new window . Not every entrepreneur needs to bring a radical change to a business; sometimes, simply executing a proven model well is the best path to success.
5. Alignment with Your Talents
The ideal business should thrive on your strengths and not suffer from your weaknesses 03:10 Opens in a new window . It is vital to be honest about what you don’t do well. If the current employees have skills that cover your weaknesses (like marketing), ensure you can retain them 03:30 Opens in a new window .
The “Smell Test” If a deal seems too good to be true, it probably is. In hundreds of deals, there has never been a “perfect” transaction without errors or issues 04:10 Opens in a new window . If you are looking for zero risk, entrepreneurship may not be the right path for you.
Michael Shea represents the Tampa Florida Transworld office. In business since 2005, he has established a reputation as a trusted business broker across Florida’s key markets- from Tampa to Orlando, Melbourne, and more. Over the past two decades, Michael and his team have closed over $1 Billion in sold business volume and presided over more than 450 transactions. His credentials include the IBBA Certified Business Intermediary®, and most recently, the prestigious Certified Exit Planning Advisor® (CEPA) credential. He is also a Florida Licensed Real Estate Broker and Business Brokers of Florida Board Certified Intermediary