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Buyers buy a business for many of the same reasons that
sellers sell businesses. It is important that the buyer is as serious
as the seller when it comes time to purchase a business. If the buyer
is not serious the sale will never close. Here are just a few of the reasons
that buyers buy businesses:
Laid-off, fired, being transferred (or about to be any of them)
Early retirement (forced or not)
Job dissatisfaction
Desire for more control over their lives
Desire to do his or her own thing
A Buyer Profile
Here is a look at the make-up of the average individual
buyer looking to replace a lost job or wanting to get out of an uncomfortable
job situation. The chances are he is a male (however, more and more women
are going into business for themselves so this is rapidly changing). Almost
50 percent will have less than $100,000 in which to invest in the purchase
of a business. In many cases the funds, or part of them, will come from
personal savings followed by financial assistance from family members.
The buyer will never have owned a business before, and most likely will
buy a business he or she had never considered until being introduced to
it.
Their primary reason for going into business is to get
out of their present situation, be it unemployment, job disagreement (or
discouragement). The prospective buyer wants to do their own thing, be
in charge of their own destiny, and they don't want to work for anyone.
Money is important but it's not at the top of the list, in fact, it probably
is in fourth or fifth place in the overall list. In order to pursue the
dream of owning one's own business, the buyer must be able to make that
"leap of faith" necessary to take the risk of purchasing and
operating their own business.
Buyers who want to go into business strictly for the money
usually are not realistic buyers for small businesses. Keep in mind the
following traits of a willing buyer:
The desire to buy a business
The need and urgency to buy a business
The financial resources
The ability to make his or her own decisions
Reasonable expectations of what business ownership can
do for him or her
What Do Buyers Want to Know?
This may be a bit premature since you may not have decided
to sell, but it may help in your decision making process to understand
not only who the buyer is, but also what he or she will want to know in
order to buy your business. Here are some questions that you might be
asked - and, should be prepared to answer:
How much money is required to buy the business?
What is the annual increase in sales?
How much is the inventory?
What is the debt?
Will the seller train and stay on for awhile?
What makes the business different/special/unique?
What further defines the product or service? Bid work?
Repeat business?
What can be done to grow the business?
What can the buyer do to add value?
What is the profit picture in bad times as well as good?
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