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Find Your Ideal Business
By Glen Cooper, CBI, CBA, BVAL
It takes months to successfully search for a business acquisition. The landscape is littered with nutty sellers, part-time brokers, hidden information and outright scams.
Contacting a full-time professional business broker is your best bet. But, in this article, I want to offer an outline of what else you can do. There may be more than one path to follow that will lead to your ideal business.
Search Your Own Networks
For many of you, with current jobs, your search to buy a business must be confidential. But, for those of you who can search openly, the best start is with your own network of friends and acquaintances. Ask them to recommend ideas to you. Ask them for leads. Find out what they know about buying a business that you don't know.
Your attorney, your accountant, your banker, your neighbors and your relatives already think they know more than you do, right? Why not ask for their advice? They just might come up with something helpful. Begin with this step if your search is an open one.
Contact Trade Associations
Almost every business has its own trade or professional association. The reference department of the nearest public library has an Encyclopedia of Associations. It’s also on the Internet. From this source, you can get the name, address and phone number of the appropriate associations. Call these associations directly if you know your area of interest.
Ask for a list of consultants the association recommends. Then, try calling these people. Consultants who specialize in any given field will usually know whom to contact for leads on businesses for sale within their specialty.
Trade magazines that are published by the associations or by private publishers may also have a classified section for business opportunities. If you are interested in a particular type of business, subscribe to the trade journals of that business specialty. Many are also on the Internet.
The trade association may also be able and willing to sell you a list of their members in your area.
Cold-Call Current Owners
If you think you know what kind of business you want to own, just pick up the phone and call the owners of these businesses. This is not as easy as it first appears, but it can occasionally work.
If you didn't get a list from the trade association, your local librarian can direct you to the general business directories for your area. These directories list businesses and the owners' names. You can also just use the phone book and start calling.
Cold calling is what business brokers use themselves to find listings. The advantages of this method are many, but there are also some pitfalls.
There are three advantages to cold-calling current owners. If you do it, you may find yourself in the unique position of being the only one who knows the business is for sale. You may catch the owner at precisely the right moment. This method also allows you to target precisely the right type of business.
The problems with this method include wasting time with unrealistic sellers, failing to get enough information from skeptical sellers, and negotiating with sellers directly. Eliminating the 'middle man' also eliminates the advantages that the 'middle man' brings.
Business owners are often unrealistic about price and terms. Buyers who arrive on the scene too early are often amazed at how long it takes some sellers to get realistic. We brokers usually must spend time educating sellers, earning their trust and getting them ready to appreciate qualified buyers.
Review the Internet Multiple Listing Sites
A common fallacy is that there are never any good businesses for sale that are openly advertised. Please don't tell this to the scores of people we've reached this way!
Don't be confused by the junk businesses that also appear in these websites. The multi-level marketing schemes, the pay phone locations, the vending routes and the once-in-a-lifetime opportunities to become an overnight millionaire can make you think all lists of business opportunities are the same. They're not.
Right next to these laughable ads are often some exciting opportunities - for the right person. Get organized when you call on these ads and eliminate the ones that don't work for you.
The questions to ask when phoning on these ads should be directed at eliminating them from consideration. Ask, "What's for sale? What's the opportunity? Where's growth going to come from? How was the price determined? Why are you (or why is the seller) willing to sell this great opportunity to a stranger?" Insist on straight answers or go on to the next ad.
The best sites today are www.BizBuySell.com, www.Bizquest.com, www.BusinessesForSale.com, www.BusinessMart.com and www.MergerNetwork.com.
Call A Business Broker
In pursuing the techniques of this article, you will probably run into a business broker at every turn!
Your own network of friends will know us, the trade associations will refer you to us, and the websites will direct your inquiries to us. Even when cold-calling current owners, many will tell you to call us.
Expect that a business broker will register you in order to qualify you. Only about 2% of all buyer prospects who call a business broker will follow through and actually purchase a business from that broker. So, realize that the business broker is trying to discover whether or not you're among that elite 2%!
One way to look like a serious buyer prospect is to demonstrate that you're serious. You expect the broker to convince the seller to share tax returns and provide seller financing. In return, you need to give the broker your financial statement and resume to show to the prospective seller.
You may have heard about buyer brokers in real estate, but a broker who represents only buyers is rare in business brokerage. It's difficult to get the seller's trust and buyer brokers can never get enough information about the business. In home buying, a buyer broker is able to find out just about everything there is to know from the public record. The inside story of a business is only shared with someone who is trusted by the seller. Small business owners, when selling, feel very vulnerable. They have a hard time trusting their own brokers; their resistance to buyer brokers is worse.
Want to know more? You might want to attend the SCORE seminar I give quarterly in Portland, Maine entitled, “Buying A Business.” This 3-hour session is packed with most of what I've learned over 29 years as a business broker! Or, you can fill out our Buyer Registration Form online and come in to meet with us personally.
“Maine Business Brokers service was quick. The warm and friendly service was accompanied by timely and thorough follow-up.”
Richard W. Hale
Buyer, Furnex, Lewiston, Maine
