A large portion of baby boomers are business owners because the scarcity of jobs when they entered the workforce drove them to create their own jobs and become...
I Can't Decide if I Want to Buy This Business
I found a business I like, but I am not sure if this is the business I really want to buy. What should I do? Am I making the right decision?
I am not sure if this is the right business, what should I do?
I have seen buyers buy a business that is making $10,000-15,000/month net and literally run it into the ground in three months. I have also seen buyers buy a business and double the net within six months of operation.
Ray Kroc bought McDonalds from two guys who thought they were pulling a fast one on him and dumping a loser.
I would recommend taking into consideration whether the business (any business you are looking at) is truly a good fit for you and if it matches your skill set. It has been my experience that this is just as important as the numbers. If you buy a great business that is making tons of money, but you don’t like it, then it is very unlikely you will be successful. The opposite is also true.
How do I know if this is the right business for me?
You really wouldn’t know. Besides, there is no “perfect” or “right” business. Success has just as much to do with what you do after you buy the business as it does as your selection process.
I believe any highly experienced business owner who has owned and operated large, successful businesses could probably take any business we have for sale and double or triple the volume within a few years. Why is this? It is because the owner seizes opportunity, takes action and executes. They are not looking for what is not there, but rather sees what is there and executes.
What is the number one thing I should look for in a business?
You should certainly look at the numbers; however, most buyers don’t place enough emphasis on whether the business is a good fit for them. Few look at the growth potential and how likely these growth plans are to be achieved. Businesses are not stagnant, dormant investments. They interact with your personality and action plans. If you truly enjoy the business and it is a good match for your strengths, then it is likely you will do well.
Why do you think CEOs of large Fortune 500 companies are sometimes paid tens of millions of dollars per year?
The boards of these large companies clearly realize that the success of a company is just as dependent on those who are running it, as it is on the business model itself.
Regardless of the decision you make, I would suggest that you do make one. I have seen buyers become paralyzed in this decision process for over two years when they could have owned, operated and sold two businesses during this time period. They could have learned more operating a couple of businesses than they could have in ten years of research and analyzing. There is no “perfect” business; however, there is a “good fit.”
I highly empathize with buyers who cannot overcome their fear of owning a business. Buying a business can be a very fearful process if you have never owned one before. Coming to grips with your fear can be a very big challenge for you. However, there is one thing I nearly always hear from first-time business owners after they make the purchase: ”Geez, this isn’t that hard. What was I so scared of all along?”
Yes, most buyers realize that owning a business is not nearly as intimidating as they originally had thought. While it is hard work, they realize that being a business owner comes with a lot of freedom. Most really enjoy the freedom that comes along with being a business owner.
Here is a short story that should put things in perspective for you. It’s called the “Acres of Diamonds.”
One of the most interesting Americans who lived in the 19th century was a man by the name of Russell Herman Conwell. He was born in 1843 and lived until 1925. He was a lawyer for about fifteen years until he became a clergyman. One day, a young man went to him and told him he wanted a college education but couldn’t swing it financially. Dr. Conwell decided, at that moment, what his aim in life was, besides being a man of cloth – that is. He decided to build a university for unfortunate, but deserving students. He did have a challenge, however. He would need a few million dollars to build the university. For Dr. Conwell, and anyone with real purpose in life, nothing could stand in the way of his goal.
Several years before this incident, Dr. Conwell was tremendously intrigued by a true story – with its ageless moral. The story was about a farmer who lived in Africa and through a visitor became tremendously excited about looking for diamonds. Diamonds were already discovered in abundance on the African continent and this farmer got so excited about the idea of millions of dollars’ worth of diamonds that he sold his farm to head out to the diamond line. He wandered all over the continent, as the years slipped by, constantly searching for diamonds, wealth, which he never found. Eventually he went completely broke and threw himself into a river and drowned.
Meanwhile, the new owner of his farm picked up an unusual looking rock about the size of a country egg and put it on his mantle as a sort of curiosity. A visitor stopped by and in viewing the rock practically went into terminal convulsions. He told the new owner of the farm that the funny looking rock on his mantle was about the biggest diamond that had ever been found. The new owner of the farm said, “Heck, the whole farm is covered with them” – and sure enough it was.
The farm turned out to be the Kimberly Diamond Mine…the richest the world has ever known. The original farmer was literally standing on “Acres of Diamonds” until he sold his farm.
Dr. Conwell learned from the story of the farmer and continued to teach its moral. Each of us is right in the middle of our own “Acre of Diamonds,” if only we would realize it and develop the ground we are standing on before charging off in search of greener pastures. Dr. Conwell told this story many times and attracted enormous audiences. He told the story long enough to have raised the money to start the college for underprivileged deserving students. In fact, he raised nearly six million dollars and the university he founded, Temple University in Philadelphia, has at least ten degree-granting colleges and six other schools.
When Doctor Russell H. Conwell talked about each of us being right on our own “Acre of Diamonds,” he meant it. This story does not get old…it will be true forever…
Opportunity does not just come along – it is there all the time – we just have to see it.