You Have to Want to BUY a Business to get a deal done

Do You Really Need To Buy A Business Or Just Want To?
I tend to get a lot of blog comments in the fourth quarter each year from dejected buyers who had started the year off hoping to buy a business, and find themselves on the cusp of giving up. And so, I want to take some preemptive action and provide a business buyer’s attitude check-up, which I know will help you as you search for the right business for sale.
A series of events happened since last Monday the 14th that triggered this week’s comments so please allow me to give you a roundabout explanation.
I am not really a sports nut, but I am fanatical about two specific teams. Although I follow each with insane dedication, once they are out of the playoff picture, I lose much of my overall interest in the game.
First, I have been a die-hard Buffalo Bills fan since I started watching NFL football in the thirty plus years ago. No doubt, a few of you will point to four consecutive Super Bowl appearances in the 1990’s without a championship (at least they got to the big show), or most recently, last Monday’s last-minute loss to the Patriots (I thought they played brilliantly and way above what anyone anticipated). No problem; I, like most Buffalo Bills fans, have skin as thick as a Buick (we need it). Regardless of their dismal performance since those great years in the 90’s, my faith in them has never waivered. In fact, it has gotten stronger.
Second, coming from Canada where hockey is pretty much a religion, I have followed the Montreal Canadiens (yes, spelled with an “e”), since I was born. I watch sixty-plus games a year, and with them as well, I shall forever remain a loyal fan.
So why am I telling you this and what the heck does it have to do with buying a business?
Actually, it has a ton to do with it…..
I have always been bothered by the awful statistics in this industry, and namely that less than ten percent of the people who look to buy a business ever complete a transaction. It blows my mind that so many people could actually abandon a dream-like project once they hit a roadblock or two, because that is the only possible explanation. Of course, they hit hurdles because they don’t know what they are doing, and most buyers do not have the common sense to educate themselves first, even if they have zero experience buying businesses.
Simply giving up on buying a business because of a few hurdles would be similar to The Bills burning all their equipment and folding the team because they lost a game, or a Super Bowl, or four, or whatever.
That is not what successful people do.
I look at The Bills loss last week the same way every business buyer has to look at any hurdles, challenges or setbacks they encounter while looking for the right business for sale.
The team’s prior loss was history; it’s what they would do next that counts.
To me, a win in week two, after such a tough defeat, would actually build more character than a win over The Patriots would have provided. Sure enough they came out flying in their game on Sunday and won convincingly. That shows their true core.
Similarly, if you are not making progress buying a business, or a deal dies, or a seller’s numbers are off, you don’t just give up. You hit the ground ever harder.
Your loyalty to this project has to mirror that of a dedicated sports fan who never gives up on their team. If your team loses, you don’t jump on another team’s bandwagon. That’s not a fan.
When a deal collapses (and they will), or brokers don’t call you back, or you cannot come to terms with a seller, or you uncover huge problems during due diligence, you don’t just toss in the towel and start looking for a job (even if there were any of those available). You have to file the experience. You learn from it, and you move on to finding the next and hopefully better opportunity.
Buying a business can be a time-consuming and very frustrating process. You can always find reasons not to buy a particular business, or blame your lack of progress to external forces, or kowtow to people’s opinions that now is not the time to buy a business. These same people would tell you the exact same thing if the economy was booming.
The anguish doesn’t end there. There will be businesses you like that are snapped up by other buyers before you can make an offer. You could go into due diligence on numerous businesses only to be forced to walk from the deal.
You will encounter situations where you can easily justify abandoning the project. That is probably why so many do. However, the one common trait every successful business buyer has is a core belief in what they are doing. They do not approach buying a business with the attitude that if a good opportunity surfaces they will investigate it. That is what “lookers” do; not buyers.
A true prospective business buyer fundamentally know that they MUST become a business owner because they are no longer willing to keep doing whatever it is that they have been up to this point.
Successful business buyers don’t just want to buy a business; they NEED to buy one.
If you do not have a burning need to buy a business, let me save you a lot of time – start filling out job applications because you don’t have the mindset to buy a business.
When you truly “need” something, you keep forging ahead until you get it. That is what defines success.
If you are going to attack this project in any meaningful way, you will have setbacks; it is inevitable, but you need to stay focused on the goal line.
Just like The Bills, who no matter what happens, no matter what anyone else says, no matter how many times they get knocked down, they show up to play every Sunday. So too must you get into the game, take some hits, but you have to fight until you get to the end zone.
To read some very helpful articles about buying a business visit www.diomo.com
Have a great week.

by Richard Parker, the President and Founder of Diomo Corporation

UnderstandingThe marketing side of a business for sale

Understanding The Marketing Side Of Any Business For Sale
One of the most common mistakes people make when buying a business is in their analysis of the marketing activities, strengths and weaknesses of any business for sale they are considering.
It doesn’t matter whether you are thinking of buying a business for $100,000 or ten million dollars, understanding its marketing practices is crucial. However, the mistake made most often by buyers is they spend their time targeting all of the so-called wonderful things they are going to do to improve the business after they take over instead of effectively analyzing what the company is doing presently, or has done in the past.
Often times, this thinking overshadows the reality of the business, and can result in a buyer lulling themselves into believing they can implement certain changes, that may not necessarily materialize as they had envisioned.
Obviously, it is important to identify growth opportunities in any business being considered. But, too much focus on the upside can often derail a deal. If a buyer becomes too consumed with areas to grow the business, they will typically run into obstacles during their investigation that may upend their plans. If this happens too frequently, they may sour on the deal altogether, and decide against buying the business., when in fact they may be walking from a good business.When evaluating marketing opportunities, the main consideration must always be whether or not you are starting from a solid platform. That is why buying a business that has all the fundamentals in place to assure its stability after the purchase, is more important than fantasizing about the things one can do to make the business better in the future.
Buyers are frequently surprised to learn that a business for sale doesn’t have a marketing plan. Instead of a concrete plan, it has simply evolved into doing to same old thing year after year, with similar results, and the owners do not seem to mind the monotony. Unfortunately, in today’s business environment, businesses that cease to look for ways to grow generally are poised for a decline.
Conversely, the actual marketing plan may simply be in the owner’s gut. They understand the business intimately, and know what initiatives they should jump on, and which they should avoid. In businesses where the owner has run the marketing with a “gut feel”, you need to determine whether or not that instinct can transition to you as the new buyer. Better yet, can you translate that “know-how” to a written plan?
You will want to learn about the past marketing initiatives that the company undertook, and what were the results. You may be shocked to discover that marketing is just an afterthought for the business. I find this to be quite common in retail businesses, and especially those that rely heavily on its location. It is almost as though the owners just sit there waiting for traffic to come by. In these cases, you need to determine what, if anything can be done to get more people through the door. If in fact the business is helpless in this regard, do not fool yourself into believing you will have any more success.
As you look at any business, avoid trying to visualize for grandiose schemes to build the business. Instead, look for fundamentals that can ultimately be leveraged into growth.
For example, the simplest way to grow a business is to generate more revenue with the existing client base. It is always easier and less expensive to get customers who know you to buy more, than it is to acquire new customers. No matter what the business may be, there are always additional products or services that you can offer.
Look for competitive advantages. Why do customers buy from the business versus the competition? If you cannot identify a very clear reason, this can be a very worrisome sign. The business landscape is more competitive than ever right now, and it will not ease up anytime soon. Unless the business offers something that cannot be readily purchased elsewhere, rest assured that customers will shop around.
Does the company compete mainly on price, quality or service? It is impossible to be do all three. Whatever it is, what else can you do to exploit it?
Can the business be expanded geographically? Does it make sense to open up a second location? If that seems obvious, why hasn’t the seller done so? Or, maybe they have and it failed. If so, why? If additional locations would seem to be a logical path to grow, spend the time to determine how much it will cost to do so. Can the existing cash flow support expansion? If not, how will you access the funds needed?
Are there mechanisms in place to test and measure new marketing projects? This is the single most important aspect to marketing, and so if none exists, you will want to be certain you set them into action.
Has the company tested new price points? How did they arrive at the current pricing schemes? How often can, or do they raise prices? Clearly, if they operate in a highly competitive marketplace, this may not be feasible.
Marketing is not a big mystery. In fact, it is quite simple. It is strictly the ability to determine who is your prospect, what that they want, how much will they pay, and how can you get it to them. That's it. However, it does take some work. Most often, you really need to get immersed into the business so that you too can get a true “gut feel” for the business.
Once you marry off that instinctual understanding with an actionable plan, you can grow any business. So until that time, while looking at any business to buy, focus on its core elements to be certain you have a rock-solid platform from which to grow. After all, it is always easy to deal with the upside, but you need to be certain there will not be any downside once you get the keys to the business.