Buzz Harris
Over the past couple of weeks, I've gotten to know a gentleman who has grown frustrated in his search for a business to buy.
Paul from Sparks has been trying to find a business to buy on his own for the past four months. He has shown a great deal of initiative in making a substantial number of cold calls to local business owners to ask if they would be interested in selling their business. To his surprise, his inquiries have garnished him very few qualified leads.
This is not a surprise to me because as a business broker, I also dedicate a significant amount of my time searching for qualified business owners who are interested in selling their business. In my experience, from every 100 calls I make, I'll be able to get through to the owner approximately 60% of the time.
During these conversations, a small percentage, about 5% may actually be seriously contemplating selling their business. Unfortunately, only a very small percentage of them, approximately 30%, will have a business that will be attractive to a potential buyer.
Therefore, this means to find eight quality businesses that may be for sale it may take an average 1,000 phone calls.
That is the good news. The bad news is that it is likely that a large portion of these business owners’ expectations will be overly aggressive.
This is how I met Paul. He became frustrated heading down many roads that lead to nowhere and then decided to contract with us to help him with his search.
Paul is like many of the clients we work with period he knows the types of businesses he doesn't want, but he does not know what he does want. This approach is a good one to take because I can't even begin to count the number of times that buyers have purchased businesses that weren't even on their radar when we first met them.
Fundamentally, this is one way that professional business brokers can assist buyers. They should be able to show the buyer a variety of businesses that are legitimately interested in selling, and then help them through the purchasing process.
A good broker should have a significant number of businesses in their portfolio with positive cash flow that are in a sales range that will allow the buyer to earn a good return for their investment.
Once a buyer has decided on a business, a good broker will be able to draft a purchase agreement that covers all pertinent issues (i.e. non-compete agreements, inventory agreements, leases, due diligence, etc.) plus any unique contingencies that are relevant to the transaction.
