Let’s face it – In today’s economy there is a lot of risk associated with doing business. It seems like every week you hear a story on the news or from a friend about some new business going bankrupt. We are surrounded by people who are being shattered by this economy.
So, what are we supposed to do?
As entrepreneurs/business owners, how can we ensure our own financial security in this time of hardship? How can we be sure that buying a business for sale won’t be just another in a line of business failures?
Well, today I would like to talk to you about 3 ways you can ensure that you are running a competitive business. Specifically, I’d like to talk to you about business acquisition and how to do it the right way so that you are taking much LESS risk, instead of more.
3 Tips to Decrease Risk When Buying a Business for Sale
Tip #1. Be Patient
Just because you’ve decided that you’d like to buy a business for sale doesn’t mean you have to go out and commit to a purchase tomorrow.
Take several weeks or even several months to monitor the listings in your area. Try to develop an eye for which businesses seem to be going up for sale because they’re losing money and no longer viable, and which businesses are going up for sale simply because the owner/management no longer has the time or desire to commit to their business.
Obviously, we would like to find the latter.
If you rush into this acquisition you’re liable to make a stupid decision, or to perceive something the wrong way, which down the road could cost you your success.
Tip #2. Study Cause and Effect of Promotion Strategies
One of the huge advantages of buying a business for sale over starting your own business for sale is that you have an opportunity to see what that business has done to promote itself, and how it had an impact on that business. In other words, you can observe a promotional campaign and judge its ROI without having spent any of your own time or money on doing so.
This is immensely powerful, and not something to be skipped over lightly.
Once you have a business in mind that you think you might be interested in, it’s important that you talk to the owner about what promotional strategies they tried in the past and what kind of results they seem to. Comparing promotional campaigns to financial data is one of the most powerful ways to pre-judge the current and future success of a business before you buy, and if possible I advise you try to find a way to do so.
Tip #3. Embrace the Brand, Don’t Shake the Brand
Many people who acquire a new business think that the only way they’re going to be able to make it successful is if they put their own “personal touch” into it. In other words, they believe that their own personal branding is going to be what makes or breaks a business’ profits.
However, this is nothing more than a romantic ideal that many entrepreneurs can’t seem to separate themselves from, and in the end it causes them to lose money.