There is an old saying that goes something like this:
“The worst day of working for yourself is better than the best day of working for someone else.”
As a business owner, you know this to be true. It is a message we deliver to buyers every day.
The buyer of today is a bit different that the one of yesterday. Today’s buyer is not a risk-taker, is concerned about the financials and seems to be overly concerned about price. The price may not be the right question to ask. What is usually the more important question is how much cash is required to buy it.
Today’s buyer is finicky, due certainly in part to the fact that, he or she is not a risk taker. Quite a few buyers enter the business buying process and, at the last minute, cannot make the leap of faith that is necessary to conclude the sale. The primary reason that buyers actually buy is not for the reason one might think. Money or income is about a third, maybe even fourth on the list.
Buyers buy because they are tired of working for someone else. They want to control their own lives. In some cases, they have lost their job, or are being transferred to a place that they don’t want to move to, or are very unhappy in their jobs. Surveys indicate that about half of the people in the country are unhappy in their jobs. They buy a business to change their lifestyle.
The Make-up of a Typical Buyer
The typical buyer of the small business has many of the following traits:
- 90 percent (90%) are first time buyers. In other words, they have never owned a business before.
- Almost all of them are looking to replace a job.
- Most buyers will have about $100,000 to $300,000 in liquid funds to use as a down payment.
- Most buyers are looking at businesses priced at about $500,000 to $3,000,000.
- Most buyers will want to use their cash as a down payment on a larger business instead of paying cash for a smaller business.
Traits of a Serious Buyer
Obviously, lots of people go through the process of looking for a business. However, those buyers who will eventually purchase a business have most of the characteristics outlined above. Going a step further, the serious prospective buyer usually possesses the attributes described below:
- Has the necessary funds and they are readily available
- Can make their own decisions
- Is flexible in the type and location of a business he or she will consider
- Has a realistic and sincere need to buy
- Has a reasonably urgent (within three to four months) need to buy a business
- Is cooperative and willing to listen
Business owners should take a second look at those who express interest in their business. If the prospect has very few of the above traits, perhaps you should move on to the next potential buyer.
When you are ready to sell your business, we have buyers looking to purchase all types of businesses.