In This Episode
Over the years we have helped several clients buy companies. Some have been individuals looking to own their own business. Many more have been clients with an existing business they are looking to grow and decided to pursue acquisitions as an option. Our discussion during the show today centered more on the folks who are looking to buy their first or next business.
So one of the first questions we usually hear is, how do I figure out what type of business to buy? Our simple response to this is that you need to turn over some rocks. Now don’t go looking in your backyard or surrounding area for some literal rocks to look under, there’s a way to do this when it comes to looking for a business to buy.
A great starting place is the Internet. If you put in any search term related to buying or selling a company into your favorite search engine you will likely get thousands of options. We suggest starting with some of the better known web sites that have businesses listed for sale (e.g. www.BizBuySell.com, www.businessesforsale.com). A similar but often overlooked area to investigate is the “business opportunities” section of your local newspaper or business journals. It’s kind of like a classifieds section for business. Also don’t forget about franchises. There are a lot of franchise brokers out there as well as listings of franchises available for sale or looking to grow their footprint.
Starting with these avenues will usually present you with different options for companies for sale in your area. These are the “rocks” you’ll want to be looking under and investigating. One of your first tests will be getting past the business brokers to get information on the companies listed for sale. Each broker will have a slightly different form they’ll want you to fill out with some personal financial information. This “screening” process is designed to scare away the folks who aren’t serious or who don’t have the financial means to purchase a company. Don’t let this deter you. There are a couple of ways to get around divulging a lot of personal information which we shared during the show today.
The best way to figure out what type of business you’d like to own is to see as many different companies as you can and find out which ones get you the most excited. We shared a story on the show today about a client of ours who wound up buying a dental staffing business even though he had no background in dentistry and didn’t even know this type of business existed until he started turning over rocks.
If talking with a bunch of business brokers isn’t your idea of the best way to start, maybe you’d be more inclined to investigate things like the Inc. 500/5000 list. This is an annual list published by Inc. Magazine with the fastest growing privately owned companies in the U.S. These companies are typically grouped into a couple dozen categories and we contend that if you can’t find any businesses in that list that get you excited then chances are business ownership might not be for you.
If you have some luck finding different types of companies that interest you, then you can cobble together a list of those companies in your area and start reaching out to connect with them. We suggest starting with a simple letter writing campaign to introduce yourself to the company and let the owner know you will be reaching out to touch base. Even though most of these companies aren’t officially “for sale” you might be surprised how many of the owners will take your call and even meet with you.
If you’re feeling frisky, you may want to even reach out to your local IRS agent to see what they might have available. Sound too good to be true? Jack shared the experience he had when buying his first company which he did through the IRS.
Whatever approach you start with, keep in mind that figuring out what company you should buy is a contact sport. By that we mean you’ve got to get out there and engage with people. It’s great to do some upfront research but you’re really learning and opportunities will come as you start to get out there and turn over those rocks!