The Necessary Leap of Faith to Buy a Business

Statistics about the sale of businesses in North America have shown that 90% of people actively looking to buy a business never buy any business in their lives. This represents tremendous waste in time and effort. These people not only waste their own time and money but also brokers’ and sellers’ time.

Business buyers generally need to gather as much information as they can about the business to make an informed decision. This could become a never ending process as the more information is accumulated the more issues and concerns are raised. In their effort to eliminate risk, business buyers end up looking for the ideal business that could only exist on paper.

The decision to buy a business is not a mathematical decision where all parameters are known. Business is full of uncertainty and the risk can never be completely eliminated. Due diligence and analytical thinking can help reduce the risk but not eliminate it. A leap of faith is necessary when the time comes to make a final decision about the purchase of a business.

We find that the leap of faith is even more important for former corporate executives looking to purchase a business. Large Corporations use very strict business decision processes. While costly and time consuming, these processes are justified for multimillion dollar investments. Are they justified for small business acquisitions?

In our relationship with potential business buyers, we find that a majority of buyers spend more than a year looking for the perfect opportunity. Is it worth the time? Would buyers be better-off spending this time improving a “non perfect” business rather than looking for the perfect one?

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