There a numerous benefits of owing your own business and being your own boss; however, making that happen is basically a “make or buy” decision. In other words, do you “make” by starting your own business or do you “buy” an existing business.
In many cases it may be more prudent to consider buying a current business than starting from scratch. As business intermediaries, our primary focus is helping connect current business owners with prospective buyers.
Obviously our goal is to get to the closing table; however, it is more important to make sure the business is a good fit for you, the buyer. Initially, you should complete an introspective evaluation by considering some important questions.
- What type of business fits my skillset, education and experience?
- Am I prepared for the challenge of managing my own business – stamina, mental-toughness, confidence, fortitude, and risk tolerance?
- What size of a business can I acquire with my financial resources?
- If applicable, does my spouse/family support my decision?
Once you are committed to purchase and have identified a business, then your work begins to gain a clear understanding of the business.
- What are the financial results of the business? Past 3-5 years, current results? Generating sufficient and sustainable returns?
- What is the customer make-up and concentration? Reliant on a few key accounts? Diverse base? Geographic dispersion? On-going contracts?
- Why is the owner(s) selling the business? Retirement, health, burn-out, relocation?
- What is the reputation of the business? Client/customer reviews. Social media reviews.
- Who are the competitors? Many or few? What are the differentiators between business and competition?
- What is the employment profile – skills, length of service, retention risks?
Depending on the business, there may be more questions. Be sure to reach out to a licensed business intermediary (business broker) to explore your options.
Steve Niehaus, MBA, CBI
[email protected]
239.565.3171
