Don't buy a business or sell a business until you know the basics!
2004, we've worked with thousands of buyers collectively from around
the world and Australia both as Business Brokers and through BizClassifieds' online business for sale marketplace. We see a common theme with buyer behaviour that you need to know before buying a business OR selling a business.
Buyers want the best return on investment - poorly written ads hide golden opportunities so dig deeper!
Every buyer wants a business opportunity that offers a good, if not exceptional, return on investment. A substantial number of businesses for sale and business opportunities completely miss buyer's interest and this is important to realise both as buyers and sellers.
The perfect business opportunity may not be packaged and presented well, and quite often the key selling point of a business is not uncovered until much later (mainly due to protection of private information in the early stages of enquiry and/or failure of the advertisement to initially spark interest), or not at all.
Advertisements that fail to sell the business in the first instance are dismissed even before a simple email or phone call is made. As sellers and buyers, it is important to understand this weakness in the marketing of businesses for sale. Every business opportunity that falls into your price bracket should be considered and not immediately dismissed without at least an email or phone call to the seller. We see time and time again advertising material that is written and re-written, packaged and re-packaged, has the ability to dramatically change the level of buyer enquiries. This demonstrates that good business opportunities can be right under your nose.
Competition is fierce for good business opportunities - Act quickly!
We know from our statistics that there are now over double the number of business for sale enquiries compared to the same time last year (300,000 approx. in the month July 2011 versus 700,000 in the month July 2012). Competition is incredibly fierce for good business opportunities so when you see a good business advertised for sale, be prepared to act quickly. This doesn't necessarily mean leap in and make an offer but initiate the enquiry, make sure you know how you're going to pay for the business, and know who to contact to make the sale happen.
Buyers change their mind - discover your hidden passion or talent
Ask any business owner or buyer about their journey to buying a business and you'll probably find that a substantial number of buyers end up buying a business completely different to what they set out to buy, or set up their own business venture. Understanding this interesting buyer behaviour may open your mind to new business opportunities that better suit a passion and/or talent you hadn't considered or discovered.
Sometimes you have to stumble into a business opportunity but don't hesitate to ask the seller or Business Broker whether they have other business opportunities that suit your budget. Be prepared to consider businesses for sale that are advertised outside of your budget (for businesses advertised with no price find out what range it falls in). You never know how motivated the seller is or what the seller is prepared to accept.
Don't be afraid to make an offer - an offer is an offer
We often see businesses sell for less than their initial asking price (and sometimes for higher). Businesses can fail to sell due to price.
Consider the business without a price tag and if you feel it otherwise suits your requirements, don't be afraid to make an offer. Contracts can be made subject to due diligence (further investigation). If further investigation uncovers considerations you find unsuitable to your requirements, you can either choose to compromise in some way, or choose to terminate the contract.
If you find the business opportunity is satisfactory for your requirements and your due diligence is also satisfactory, then your offer would have paid off. All business transactions are on terms and conditions mutually agreed between seller and buyer. This means that you would only enter into a contract of sale if your offer is accepted, or after both parties have negotiated back and forth and both parties are satisfied with the offer. If neither party is satisfied with the negotiations then you both walk away.