What Separates Actual Business "Buyers" From "Dreamers"?

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The vast majority of business “buyers” are in reality “dreamers” that will never buy a business.  Industry statistics show that more than 90% of people who contact a business intermediary never acquire anything.

So what separates the 10% who achieve their dreams of business ownership from the 90% who don’t?  If you want to be one of the elite 10%, what should you do?

• Be fully committed to buying a business.  In this regard, owning a business is like anything else in life that requires substantial effort to succeed.  If you aren’t committed, it is too easy to stay in the status quo, to keep the job that pays the bills even if it is unsatisfying, or keep the business in Texas even though you’ve always dreamed of living in Hawaii.  This commitment means consistently spending time searching and checking out opportunities, and when the right opportunity arises, doing whatever it takes (such as taking emergency time off from work and getting on a plane) to make a deal happen.
• Have at least $50,000 in liquid funds available to invest and ideally $100,000.  Little worthwhile can be bought for less than $50,000.  If you want something beyond a “starter” business, plan to have money to invest at closing equal to about 1.5 times the annual profit you expect the business to generate.  To learn more about how much you need, review our information on business valuation.   Understand that you can not borrow the down payment from the seller, bank or any other intelligent source (other than perhaps a blood relative). 
• If you plan to obtain money from family, friends or other investors to buy the business, have a frank, detailed discussion with them to work out precisely how much they are willing to invest, what the terms will be, what criteria the business will need to meet, etc. so that you can proceed with confidence and a clear understanding of their requirements.  To greatly increase the odds of success, create a detailed professional business plan before asking for the money. 
• Pay your bills on time and maintain a strong credit report, just as you would in the years before buying a house.  You almost certainly will be asked to get a credit report at some point during the process, from a seller, bank or landlord. 
• If you are seeking to buy a business with a spouse or partner, involve that person actively in the search.  We’ve seen countless deals fall apart after many hours invested by the buyer that could have been avoided if both parties were involved from the beginning.
• Fill out a profile of the type of business you would like to acquire at our buyer registration form.   This enables our agents statewide to work for you to find the right business for you.  Remember, many of our businesses are never presented on any web sites or marketed via email to protect seller confidentiality.  In these situations, we work our buyer databases and industry contacts.
• When we send you profiles on business, gives us your feedback. If the business is not right for you, let us know why so we can provide better suggestions in the future.
• If you live in Hawaii, make an appointment to meet with us in our offices.  We communicate with hundreds or buyers every month and naturally tend to remember better and take more seriously folks who are willing too make the effort to meet with us.
• If you do not live in Hawaii, schedule a trip to our islands to view businesses of interest to you.
• Don't expect to find businesses without flaws; they don’t exist.  Understand these flaws are an opportunity for you to take the business to a new level.
• Don’t expect more than a few businesses with less than $20 million in revenue to have audited financials (and most above that figure won’t either).  Audits run tens of thousands of dollars and few businesses can justify the expense.
• Understand that even when buying an established business, there is no guaranty of future sales.  Very few businesses have more than a few customers under any kind of contract, and those that do (such as security alarm companies) sell for a substantial premium.  Moreover, even if customers are under contract, if the business’s quality or service falters materially after you buy it, some will leave you despite the contract.  On the other hand, if you do a better job than the prior owner, you will find current customers with no contracts buying more from you than the prior owner and sending you referrals.  It all depends on you, not on written agreements.
• Realize that you are not likely to acquire high quality companies with low ball offers.  Some buyers are constantly throwing out low ball offers, which just alienate intermediaries and waste time. 
• Don’t be overly dependent on the advice of your attorney, accountant or others to make a decision.  Be willing to take a calculated risk.  Understand such advisors always reduce their risk dramatically if they recommend against something rather than for something.  Make sure they have ample experience in business acquisitions; most don’t.  We can refer you to advisors that do.
• Educate yourself.  There is a ton to learn about buying a business.  This web site has quite a bit of information we hope you’ll find useful, as do quite a few others.  Consider taking our webinar The Art & Science of Acquiring the Right Business.  The cost is only $39, features five Honolulu mergers and acquisitions experts and is available 24x7.

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