“Why is finding a business to buy so hard? I’ve been looking for eight months, talking to brokers, bankers, anybody who might have a lead. All I’m seeing are problem businesses.”
Elizabeth (not her real name) told me she was ready to leave her corporate job with one of Nashville’s most prestigious large companies. “I am well paid and doing the kind of work I went to school for, but ten years in to it, I’m just bored. I’ve always had a sense that being a business owner would be more fulfilling, I just didn’t know how hard it was going to be to find something.”
I have a conversation like this about twice a month, and I mean, exactly like this. A man or woman, successful in corporate life, seemingly ready to make the jump to entrepreneurship through acquisition of a business. The number who actually do, I can count on one hand. Why the disparity?
I can speak to this from personal experience, having left a great job with the Walt Disney Company to buy a radio business in Nashville. Looking back on my decision, I can see that I didn’t use much of the rational brain God gave me. It was an emotion-filled decision; I wanted to be my own boss, I wanted something I could do with my family, I wanted more control over my long-term upside, I wanted to do something I felt had meaning (Christian music radio), etc., etc. I thought I was being rational at the time, but I really wasn’t. My decision was primarily driven by a mishmash of emotional factors.
Now, to be clear, I am not advising people like Elizabeth to check their rationality at the door when making their decision about buying a business. But, I can say that unless there is a strong emotional element (dare I say, irrational element?) to the decision, people like Elizabeth will never make the jump.
That’s why there is a disparity between the many people saying they want to buy a business and the few that end up doing so. Buying a business is almost always an irrational decision because every business has problems, flaws, or warts. These are the things that keep the rational brain from seeing opportunity. After all, from the age of six we are told to rely on our rational brain, to not be emotional when making a decision. And once we get into a corporate setting, we are paid to do rational things the way they’ve been rationally done before. The mission statement on the door might say otherwise, but painting by numbers is how it works in corporate life.
But painting by the numbers just doesn’t work when buying a business. Only the irrational mindset can see beyond obvious problems to see opportunity in a small business. Then, once you see the opportunity, the jump into it is an even more irrational decision. For people like Elizabeth, midway through their corporate career, it’s a good idea to stop and consider if they are the type who would do well in an entrepreneurial setting. Most will say “no” to that choice but they will then better appreciate the value of the corporate setting they are in. But for those irrational few, I say, ”welcome to business ownership.”
JIM CUMBEE is President of Tennessee Valley Group, Inc. a retainer-based business brokerage and transition mediation firm in Franklin, TN. Cumbee is an attorney and has an MBA from Harvard Business School. Jim is the author of Home Run, A Pro’s Guide to Selling a Business. https://www.amazon.com/Home-Pros-Guide-Selling-Business/dp/1599329239 . He has a wide range of corporate and entrepreneurial experiences that make him one of the most sought-after business transition advisors in the state of Tennessee. The principles above are true, but the story, names and fact patterns are changed to preserve the parties’ identities.
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