Would you believe that less than 10% of all buyers who inquire on a business sale or into the process of buying a business ever get to the closing table. Well, it is true…sadly.
The reasons for such a miserable number are many: lack of knowledge, lack of funds, financing and capital issues, frustrations, and sometimes road blocks from “advisors” of both buyers and sellers.
Many times I have been asked what is the most important element to successfully buying or selling a business and it all comes down to one thing “Education”. That includes education on finance, accounting, business management, roles of the parties to the transaction, and of course the process.
Buyers have to keep in mind that regardless of market conditions, unlike real estate where the market switches between a “buyer’s” or “seller’s” market, in the business sale sector, it is always a seller’s market. There are always a ton of people looking and the majority (less than ten percent) will ever buy a business. And so, business brokers know that over ninety percent of the buyer inquiries they receive will not result in a successful transaction. It is hard to persecute an entire industry knowing that nine out of every ten inquiries they get will unfortunately be a waste of their time. Additionally, there are a lot of garbage businesses listed for sale but the good ones always sell quickly and at good price and terms.
With that in mind, buyers must separate themselves from the crowd. They must first and foremost be serious about this project. Next, they must be educated. Third, it is useless to hide your financial situation or worse, to be delusional thinking you can buy a business for no money down. It is simply not going to happen.
Any contact a buyer has with a broker, and especially the first time, should be the opportunity for the buyer to distinguish themselves from the rest of the crowd by asking relevant questions, not expecting a seller to provide highly confidential information immediately, or by making any unreasonable demands. This is the most effective manner to start the dialogue between the parties. Brokers and sellers are never impressed by “pushy” buyers or ones that come on as “know-it-alls”. They are impressed by only two things: One, an intelligent prospect who demonstrates they have dedicated the time to become an educated business buyer and have acquired the necessary knowledge related to buying a business and two, by individuals who have the fortitude, financial and otherwise to get to the finish line. When a buyer can convey these two points, the good business brokers will go above and beyond to service them.
For more on buying or selling a business visit our website at Transworld Business Advisors