If you want to become a business owner you can either buy an existing business or start your business from the ground up.
People who have a desire to transition from working for an employer to being the employer usually start their search by looking at resale businesses. Their objective is to replace their income as soon as possible and then grow the business to create additional financial rewards.
The search starts with a visit to online sites that have large inventories of businesses for sale. The buyer ‘sorts’ by price, location, and industry to create a list of potential opportunities. He then contacts the person who listed each business to request the financials on each resale.
With financials in hand, the buyer dives into the details, head down, to answer the question of “is this worth buying?” If the numbers indicate the business is under-performing or not financially sound then many buyers terminate the evaluation and move on. The thinking is that if the financials are not satisfactory then why “waste time” looking beyond the numbers to evaluate the core business. Fundamentally solid business opportunities are often dismissed based on the financial reports without giving any thought to whether the core business is sound. Too many buyers make the decision to walk away from an opportunity based solely on the quantitative information they are presented.
To find the best business for you, make a commitment to evaluate all facets of each opportunity you consider. Shift your focus from the fear of wasting your time to the rewards of investing your time in order to make good decisions. Be thorough, thoughtful and comprehensive in your research. The more you learn about each opportunity you evaluate, the greater the likelihood you will ultimately make a wise decision.
The following list outlines five components of a resale that might not show up on a financial report but could offer significant value to the person who brings the right leadership skills and vision as the new owner.
Five things to look for in resale opportunity:
- The success of the business is not just due to luck and hard work by the owner. The growth of the business occurred as the direct result of plans and strategies put in place to attract and serve customers. There are systems, processes, and procedures that lead to predictable and consistent results.
- The people who are employed by the business are worthwhile to the business. The ‘team’ works well enough together to produce a positive outcome. They are knowledgeable in their roles and effective in their execution. Their future under new leadership may be uncertain, but they are good enough at what they do to remain on board during a transition.
- The customers of the business are loyal. The business has a product or service they need and continue to seek out. Their product/service offering is appreciated enough to attract repeat business or referrals. There is a level of commitment to what the business sells or serves. This suggests continued growth is likely under a new owner.
- The marketing message of the business resonates with targeted customers and attracts new business. Each time the business spends money on marketing and advertising the business enjoys an increase in revenues. The business name has a solid reputation which is reinforced by its online presence.
- The business offers the new owner a transitional salary and the potential for additional earnings overtime. If the income of the current owner is low but the potential for future growth is high this should translate into a lower acquisition cost for the future owner.
