Inc. recently posted “10 Questions to Ask Before Buying a Business.” The 10 questions are excellent and certainly a prospective buyer should try to get answers to all of them. Below are a few comments based on many years of experience both as a business broker and business owner.
Listen to the Wife
If the wife does not want her husband to buy a business, it won’t happen. People get used to a regular paycheck. The idea that there is no paycheck and sometimes there won’t be a paycheck or the amounts of the paycheck month to month will not be the same, is the one thing that many wives cannot live with. The pay one receives owning one’s own business is what’s left at the end of the week. If the wife is not supportive, then the husband better keep looking for a regular “job-job”. If she is supportive, success is almost assured. The good business broker should ask every buyer before getting too involved if he is married and, if so, is his wife supportive of him going into his own business. Then, if the answer is that she is concerned, ask the buyer to bring his wife in for the next visit. If she won’t come, she is likely scared to death and there will be no sale. On the plus side, who knows the man better than his spouse? If she has doubts, she’s probably right and the buyer should go back looking for a job.
The Hungry Buyer
Those who have lost their job for whatever reason — downsizing, being forced to move to someplace no one would want to live, company has been acquired, new management, whatever the reason, they are unemployed and maybe tired of the “rat race” — these are the buyers more likely to be serious about buying. They are not in a position where they are having to make a choice between their current employment or owning their own business. They have no current employment and know it is time to take control of their life. While they may be more serious than other buyers, they face the same one big stumbling block all buyers have to face prior to buying a business.
The One Big Stumbling Block
The one big stumbling block that kills more deals than anything else and hides behind the 10 questions covered in Inc’s article, can show up after the buyers do all of their homework and get the answers to all of the 10 questions. Everything is fine except for one important ingredient — the buyer just can’t make that leap of faith so necessary for a successful transaction. The final decision to move forward has to come from the gut feel of the buyer, and many just can’t do it. It’s only natural to be a bit scared to make the leap, but it has to be done. No one can force buyers to make the leap. I don’t see a reason why the business broker can’t bring up this issue early on and see how the buyer handles it. It might save everyone a lot of time.