Why Don’t More People Buy Businesses?

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Why More People Do not buy a business?

Introduction

You may not believe what they say yourself, but if you have been in the business of buying businesses for a long time you’ve heard someone repeat this time worn statement.

“One in 14 buyers actually buys a business.”

The business brokerage industry throws around this number all the time.

This “1 in 14” number (or only 7% ) is based on statistics gathered from some old-time brokers. They must have actually kept track of how many buyers called their firms versus how many deals they closed. We can’t know how well they tracked this info, or where this data originated from. But, thankfully, the actual number is not the important part. For the sake of solving the problem, we just need to see that it’s low, and really could be better.

Here’s why that number stays so low…

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5 Ways to Protect your Purchase Deposit from Theft

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Whenever you make an offer for a business and put down a deposit you are putting yourself at risk that it could be forfeited to the broker and/or seller. Here are a few things you can do to make sure that does not happen:

Business purchase deposit protection

  1.  Write LOI (Letter of Intent).  This is not a binding document, and no deposit is necessary. Then after you have agreed with the seller on the price and major terms, a formal offer can be written. At this point you can afford to pay to have the purchase contract reviewed by your attorney, or due diligence CPA, before being signed.  Read more

Finding Out the Seller’s Motivation

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What Motivates a Business Seller?

When working with buyers as a business broker and a CPA doing due diligence, the buyers universally ask one question. “Why is the seller getting out?

This is a good question but the question I ask is, “How do you know if the seller is telling you the truth?” Read more