FREE TRAINING: 3 Keys to Sell Your Business with Confidence

Please Don’t Buy a Business (if you aren’t comfortable in a dark room)

When he called, he got right to the point: “I want to buy a business.” I heard a sense of urgency in his voice. He went on to say “you have businesses to buy, you’re a business broker, right?”

I get this call at least once a week, and after talking with scores (maybe hundreds) of would-be business buyers, I’ve realized I need a psychology degree to go along with my advanced business degree. More times than not, the caller doesn’t want help finding a business to buy, they need help deciding what they want to do with the rest of their life.

I’m Looking for a Good Opportunity

Since the recent disruption in the US economy has caused layoffs and uncertainty, many enterprising businessmen & women have considered leaving corporate life to buy a business. The motivations I hear range from “I’m too old to find a job that’ll replace my income” to “I want to get ahead of the job cuts coming.” But there is one thing I always hear, “I’m looking for a good opportunity.”

Though I know the answer, I then ask “how do you define a good opportunity?” I say I know the answer because I’ve had this conversation scores of times, and the answer is always the same: “I’m looking for a retiring business owner who doesn’t have a succession plan, who’s willing to bring someone alongside to transition the business over 2 or 3 years.”

How Much Income Do You Want?

I don’t ask “how much do you want to invest?” because I seldom get honest answers. I get at it this way: “how much income are you looking to make once you have the business?” and this is where the rubber begins to meet the road.

When people look to buy a business say they want “a good opportunity” they are generally saying they want a business that is underpriced and has turnaround potential with an owner willing to self-finance. But here’s what always, and I mean always, happens. Once the potential buyer has evaluated a business that has one or more of these “turnaround” characteristics, the potential buyer will come back and tell me all the problems in the business. This is what I call the opportunity paradox: you can define what you want, but when you find it, you don’t want it.

Are You Comfortable in a Dark Room?

I believe about 98% off those who call me saying they are “looking for a good opportunity” really just want another job, or a better job. They are not emotionally suited for the uncertainty of business ownership. They have no appetite for the risks of taking something from point A to Point B, much less to Point Q, V, or Z.

After scores (hundreds?) of conversations like this, I’ve come to believe the one characteristic that best defines an entrepreneur is the ability to be comfortable in a dark room, to have a sense that “I can find the light.” Think about it, when you’re in a dark room, you don’t know where the walls are, or if there’s a light switch anywhere to be found, or if the light switch even works, or if there’s a functioning light bulb once you flip the switch. That’s the essence of buying a business. There is seldom clarity about how the business will perform, and truth is, corporate life does nothing to prepare you for a life of uncertainty. So before you think about buying a business, put yourself in that dark room (metaphorically and literally) and think about your emotional comfort level. After all, there are plenty of “good opportunities,” but will you know it when you see it?

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Tennessee Valley Group

Jim is an attorney (non-resident status with the Missouri Bar) and though he no longer practices law, he has read and negotiated enough legal documents to fill a cargo tanker. He has an MBA from Harvard Business School and knows how Wall Street and private equity operates. Jim is a Tennessee Supreme Court Rule 31 listed general civil mediator with tons of experience helping business owners (large and small) work through sensitive problems to achieve winning results. He is the author of "Home Run, A Pro's Guide to Selling Your Business, Seven Principles to Make Your Company Irresistible."