Why you should never buy a business that is for sale
If you are considering buying an existing business, then the information in this article can save you a lot of time, money and frustration.
Hear it:
A while ago I was talking to a person who knows how to analyze and evaluate businesses.
And he started telling me why it is such a mistake to buy any business that is advertised or registered with a business broker.
“Why so?” I asked. I had never heard that before. In fact, I have always been told that you MUST buy businesses through a broker. And that was the easiest and safest way.
“Because unless the owner is just retiring and wants to cash out, there’s usually a more sinister reason why they’re selling,” he replied.
“What do you mean?”
“Well, would you sell your business right now?”
I thought for a moment and it became clear what he was getting at.
People usually don’t sell a good business.
I know I wouldn’t sell mine right now…unless it started causing me stress or it was doing so well that I could “cash out” for tens of millions of dollars.
Unfortunately, with most businesses for sale, it’s usually not about retirement…it’s about stress or some other issue.
And if you just analyze the numbers, the financial statements and the sales…it will usually be clear what the “real” reason the owner is selling is good or bad.
And that was my friend’s point.
If you are going to buy a business, you need to do two things:
1.) Learn how to analyze a business or find someone who does.
2.) Be very skeptical of anything sold or advertised by a realtor.
In fact, the best businesses to buy are the ones that aren’t for sale.
The ones that the owner didn’t think about selling… because everything is going well. But who at the same time would be very interested if someone approached him by letter or phone call, making a profitable offer.
Keep these simple facts in mind when looking to buy a business and you’ll save yourself a lot of money, time and hassle.
#buy #business #sale