“The difference between the right word and "almost" the right word is the difference between lightning and a lightning bug”

Mark Twain 1890

As business brokers Steve and I get more queries from prospective buyers than sellers. The more enlightened queries come from potential buyers who have been actively looking for the right opportunity and as such, understand the need, not only for themselves but also for the business broker to have a target to aim at. A template so to speak, that describes what they are looking for. The more specific the better.

Here are two queries we’ve received recently:

Example Number 1

"I'm looking for a boring, evergreen, eternally profitable business, $750k-$1.2M purchase price, within two hours of me.”

Example Number 2

“I’m focused on acquiring a residential services company — $3-5M revenue, $500K-$750K earnings, 12% to 15%+ net margins. Absentee or Semi-Absentee Ownership. Experienced management to stay with company. Services I'm interested in:

I’ve been working with my bank and depending on the business I find and the financial condition of that business, I’m essentially pre-qualified for a loan up to 70% of the purchase price. The bank requires a minimum of 10% seller financing and I have the balance in cash.

To paraphrase Mr. Twain, the difference between the first query and the second is like the difference between lightening and the aforementioned bug. While they both deserve our efforts to help them find what they're looking for, there are only so many viable businesses available for purchase at any particular moment. Incidentally, "viable" is the operative word in the preceding sentence. The primary definition of  “viable” is the ability to sustain life. The secondary definition is: financially sustainable. Obviously both apply in the successful acquisition and on-going operation of a business.

In addition, it is our responsibility as brokers to bring solid, well developed offers to prospective sellers. Another reality in the business of selling used businesses is that once an owner truly commits to selling, regardless of the reason—retirement, burn-out or simply to reinvest the proceeds in a different opportunity—it essential to start the process as quickly and efficiently as possible.

At the risk of using too many aphorisms, another one of my favorites is, “Tween the dream and the deed lay the doldrums.” In other words, if too much time passes between making a commitment to sell and having an attractive offer on the table, the seller may lose interest. The owner stops thinking like a seller, shrugs his or her shoulders and mumbles, “the business is still making money, maybe not as much as it used to, but it more-or-less runs itself… so why sell”. Every business broker has dozens of examples to support this scenario.

This message is aimed squarely at people who dream of one day owning a business or have been a successful business owner and think one plus one might equal three! If you are seriously committed to buying a business, your potential for success will be greatly enhanced by doing as much of the pre-purchase work before you find the right business to buy.

Bottom line… be the bolt of lightening and not the bug...