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How to Find a Business to Buy

How to Find a Business to Buy

Waylon Jennings

Remember the Waylon Jennings song where the lyrics are “I was looking for love in all the wrong places, looking for love in too many faces”? Besides looking for love, you can also look for a business in too many places, and in too many faces.

The typical business buyer takes a scatter shot approach to looking for a business to purchase S/he has an ill defined idea as to the type of business desired, the industry, or the location.  For example, I want to buy a service business within 20 miles of where I live. This mindset is unlikely to result in a successful search.

Purchasing a business first takes a considerable amount of self-assessment.  What do I like, what am I good at, what is my educational background, what jobs have I held that I liked and did not like?  For example, you have a degree in human resources and you have worked in human resources for the past 10 years You have found this position rewarding, and you are thinking of buying an employment agency or executive search firm within 20 miles of your residence. This is what I mean by focus. You have evaluated your background, and the goal is consistent with your background. You also need $100,000 per year to live on, so the business is going to have to generate at least that amount in discretionary earnings.

Now that you have focused on your goal, the next step is to begin your search. There are a significant number of sources that you can use such as internet data bases such as Bizquest and Bizbuysell, industry publications, word of mouth, mailings, and business brokers. A business broker is probably your most expeditious source since they have a significant number of businesses for sale and they have done at least a preliminary amount of pre-screening. Remember, however, that brokers usually work for the seller and are paid by the seller.  Thus they do not necessarily have your best interests at heart.

After business brokers, you may want to try a mailing to owners of businesses the purchase of which is consistent with your goals and objective.  Commercial list companies sell names and addresses of businesses by industry as well as their owners.

Once you have located an appropriate target candidate and the owner has expressed interest in selling, remember the importance of discretion and how you would want confidentiality if you were selling a business.

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