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The Number One Mistake business buyers make
The 2nd biggest mistake a buyer makes (I will be getting to
the number one shortly); is not finding out
why
the seller really wants to sell his or her business.
When purchasing a business, it is important to look for what problem(s) the seller is having that he cannot solve. People rarely sell their businesses just to retire. There is almost always some problem they cannot solve. It may be a physical condition they have or an emotionally upsetting situation, employee problems, legal actions, a profitability issue, or it just might be the competition is cutting their throat.
The job of a buyer or his financial consultant is to find out why a seller really wants to sell. Why does the seller want to sell, this year, rather than five years ago or next year? When you find the answer to the sellers motivation, you can then determine the true value of the business and the validity of the information you are getting from the seller. You can also then figure out if the problem is fixable; by you or anyone else. If you are just buying the sellers problems, and cannot fix them, you are not going to be successful in that business.
So, what is The Number One Mistake a buyer makes when buying a business? It is, unfortunately, accepting what the seller tells them as the truth, which results in not continuing to do the vital and necessary due diligence!
When purchasing a business, it is important to look for what problem(s) the seller is having that he cannot solve. People rarely sell their businesses just to retire. There is almost always some problem they cannot solve. It may be a physical condition they have or an emotionally upsetting situation, employee problems, legal actions, a profitability issue, or it just might be the competition is cutting their throat.
The job of a buyer or his financial consultant is to find out why a seller really wants to sell. Why does the seller want to sell, this year, rather than five years ago or next year? When you find the answer to the sellers motivation, you can then determine the true value of the business and the validity of the information you are getting from the seller. You can also then figure out if the problem is fixable; by you or anyone else. If you are just buying the sellers problems, and cannot fix them, you are not going to be successful in that business.
So, what is The Number One Mistake a buyer makes when buying a business? It is, unfortunately, accepting what the seller tells them as the truth, which results in not continuing to do the vital and necessary due diligence!
