Don’t let buying a business become an expensive mistake

buying a business
Business man signing a contract. Close up of two business partners signing a document for agreement contract – business etiquette, congratulation, merger and acquisition concept

Buying and growing a business can be one of the most rewarding experiences in your life. It can also turn out to be one of the most expensive mistakes you could ever make. So, how do you go about finding the business that is right for you?

Let’s look at it this way, suppose you are looking to buy a car. Most people will work out what type of car they want and do some research before heading off to multiple car yards. At the very minimum, most people would have a picture of how big they want the car to be, how many people it needs to carry and how they intend to use it. If you decided that you wanted a two-door sports car, would you then go into a Jeep dealership that only sells four-wheel drives?

It’s the same with buying a business. Be crystal clear on the characteristics of the business that you want to buy. At the very least, articulate what style of business you want, where you want it to be (if the location is important) and how big or small it should be. This is important so you don’t waste time, energy and money looking for, and then examining businesses that you will never buy.

You also make it incredibly difficult for anyone to help you in your search if you are vague about what you are looking for in a business. If you walk into a broker and say, “find me a business”, they will put a whole range of deals to you that don’t suit you (usually coffee shops!). Getting clear on your ideal acquisition will help you and your broker to assess whether the business is right for you. These fundamental questions are important because the answers will change who, how and where you engage.

You need to go looking in different places for different styles of business. Find people and organisations that work with the type of businesses you are looking for and build relationships that will help you in the long term. If you see a business that you think might be interesting, go and see the owner! Talk to them, build a relationship with them and find out if they know someone who has sold in their industry previously. Build that relationship and you will be surprised where these conversations will go.

If your mindset has allowed you to clearly articulate what the “right” business is, then you will behave differently. So, what does it look like?

  • Clearly articulating the size and style of business you are looking for and being able to explain it in 15 seconds.
  • Having a set of guiding principles that helps you quickly determine whether a business suits you.
  • Engaging with people and organisations that have taken the time to understand what you are after and helping you find those businesses.

What it doesn’t look like:

  • Being more interested in the title of “business owner” or CEO than finding a business you are happy to operate.
  • Spending lots of time looking at a business, feeling it’s not right but not being able to articulate why you don’t like it.
  • Thinking that you can make any business work because you are special.

The research is clear – to buy the right business, you need to look at lots of businesses. You need to be prepared that it will take longer than you expect, and you will encounter lots of rejections. You have to be prepared to learn from each one that you see and to be confident that there are more than enough businesses out there for you to find that “right” one.

Ak Sabbagh, Founder, Second Squared