Before you start looking at possible businesses to buy, it’s essential that we help you think through key personal and market factors. These are the key factors that should drive your selection process and define the types of businesses that you will evaluate and acquire. Finding the right business for you will be the single biggest factor in your success as a new business owner. Getting it wrong can quickly turn your dream of owning your own business into a nightmare.
We’ve outlined below 4 critical elements to success in buying a business we’ve observed over the years in working with business buyers and sellers.
- Personal Interests
Since you will be investing a significant amount of time in your new business, your search should focus on an industry that is in sync with your desired lifestyle. It’s not uncommon for business owners to build a business around a personal hobby or passion. As a business buyer, you may not have that luxury, but the business you acquire must be situated in an industry that you can immerse yourself in for an extended time period and be content doing the type of work that is required of a business owner in that field. One of the key drivers of success is enjoying and being interested in what you do!
- Skills, Talents, and Experience
Passion alone won’t guarantee your success as a small business owner–you need to be honest about your skills and experience. For example, if you have never worked in the food service industry before, it’s unlikely that you will be a successful restaurant owner until you have accumulated experience in the field.
- Capital Requirements
You will also need to consider your capital position since some industries require higher levels of investment than others. For example, manufacturing operations usually require much more capital to acquire than small consulting firms or businesses with fewer assets. It’s critical to make sure you have enough available capital to seriously pursue an acquisition in your chosen industry. Although seller financing may be possible for a portion of the purchase price, a thorough evaluation of your current capital position can help narrow your search to the business opportunities that align with your financial means.
- Market Research
Market research, including an evaluation of short- and long-term industry forecasts, is essential in selecting potential business acquisitions. It’s important to identify an industry with the potential to increase the value of your investment. Additionally, you will need to examine the market in your geographic area to determine whether it is already saturated or if there is room for you to compete and grow your company. We can help in evaluating the condition of the regional marketplace as well as local trends that could impact your success.
There are four ways we add value to your search for the right business.
Develop Acquisition Criteria. We work with you to help you identify acquisition criteria to save you time, effort and money.
Comprehensive Due Diligence. We assist you in developing a comprehensive due diligence approach.
Create Pricing Models. Once we identify and evaluate target companies, we focus on pricing for each acquisition target. Our comprehensive approach includes tangible and intangible assets and enables judicious evaluation of target company attractiveness.
Post-Acquisition Advisory Services. If needed, we can provide post-purchase advisory services to assist in a smooth transition to the new owners.
Finding the right small business to buy is challenging. But the rewards of owning a business can far outweigh the costs–especially if you allow us to augment your search with your personal interests and professional capabilities
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