When is the right time to buy a business? It’s an important question many people ask themselves for a variety of reasons, and it becomes even more interesting when they’re considering purchasing a business after the COVID-19 pandemic ends.
That leads to a series of related questions. Such as, what types of businesses and locations will represent the best opportunities post-COVID? Which ones will pose the highest risk? Should potential new owners expect to get a decent deal, or would it be worth putting a bunch of their savings toward the purchase?
What kinds of companies have these potential owners been dreaming of during their working days? Shouldn’t it be the kind of business they could enjoy, rather than one that would run them into the ground, perhaps causing regret and a lot of lost money?
Chances are, many people will be ready to sell after the draining pandemic, and here are some tips to help you decide about buying:
1. Decide how much money you want to make. This should be the first question you should ask yourself, because the amount of money you want to earn determines what kind of business you are going to buy.
2. Pursue a business you would enjoy. It is always better to be involved in a business that reflects your interests and brings you enjoyment. Ideally, your vocation will be a vacation. We don’t want to acquire a business that requires us to be behind a desk all day long when our passion is to be outdoors.
3. Make a list of all your talents. From the obvious to the forgotten ones, don’t leave any of them out. If you are proficient at MS Word, Excel, and other computer programs, write it down. If you know how to play a musical instrument, be sure to include it on your list of talents. Take a complete inventory of things you know how to do, which will be important in your search for the business you are going to acquire.
Once, I was coaching an individual who wanted to earn additional income because his job wasn’t producing enough money. After we did an inventory of his talents, we discovered that in his younger years he had managed rental properties for his dad. I suggested he start a real-estate management business. He did and eventually owned and managed multiple properties, ultimately netting a six-figure income.
4. Select where you want to work. Do you want to stay in the same area where you are residing now, or are you willing to relocate? If you are not interested in moving, then your opportunities may be limited, unless you decide to work on a national basis by selling products on the internet.
The famous bank robber Willy Sutton was asked, why did he rob banks? To which he replied, “That is where the money is.” The best place to own a business is where there is growth. Cities, communities, and relationships are all either living or dying because nothing stays the same. Things are either going backward or forward. Stack the odds in your favor; go where there is growth and give your business an edge.
5. Know who you are as a potential business owner. Are you a self-starter who is disciplined, and once you start a project you finish it? Or do you perform better with a partner? I have worked with many people who, even though they were provided with a step-by-step guide for what to do, they were not able to implement and complete the program themselves. But if they partnered with another individual, they completed the job. When buying an operating business, you will get not only the playbook of how things are done, but also employees who know the business, as well as a business that is producing a cash flow from the day you take over.
6. Know your comfort level. Do you want to be out front or behind the scenes? Do you like working with and servicing the general public, or are you more comfortable behind the scenes helping people via emails or telephone? If you are an introvert who feels uncomfortable talking to people in person on a daily basis, then you should not own a retail or service business that requires a lot of personal interaction. I have seen people who enjoyed being a customer in a retail business, then purchased a retail business, only to discover they didn’t like the hours involved, working with individual shoppers, or the back-office duties. They ultimately sold the business at a loss.
7. Don’t get hung up on how and where you will get the money to get started. Once you have determined how much money you want to make, what you enjoy doing, what your talents are, and where you want to live, finding the right business gets a lot easier. Now you have the checklist of wants and needs, and all you need to do is to search out businesses that are for sale. A couple of places to do that are: www.bizbuysell.com and www.businessesforsale.com.
I have bought businesses with no money down and have started companies with no money down. Sometimes you may have to borrow money from credit cards or bring a partner on board to provide the money while you provide the work. This is called “bootstrapping” and it is how many people get started.
Or you may want to use what we call “Love Money,” which is from family and friends. Money is not as hard to get as people think, because if the opportunity is good enough you will find the money. Cash is attracted to opportunity, especially after a pandemic. Many owners are tired of operating their businesses and are more receptive to selling out now than before. And as the saying goes, “Luck is when preparedness meets opportunity. And opportunity is always there.”
Terry Monroe (www.terrymonroe.com) is founder and president of American Business Brokers & Advisors (ABBA) and author of “Hidden Wealth: The Secret to Getting Top Dollar for Your Business” with ForbesBooks. Monroe has owned and operated more than 40 different businesses and sold over 800 businesses.