Why Does a Buyer Buy a Specific Business?
What individual buyers want in a business are as varied as the buyers themselves.
Check out www.bizbuysell.com’s article on “Buying A Business? How to Decide the Best Business to Own” This article touches on several of the items a buyer will look at, as well as the important personal elements involved in a buyer’s decision making.
- Determine your Lifestyle Needs
- Define your Skills and Strengths
- Determine Your Industry and Target Market
- Select your Location
- Set Your Purchase Price and Terms
- Take Advantage of Technology
It’s important to consider that many potential buyers don’t know what they want. Most prospective buyers have never bought a business before, so before they start they often look for guidance. This article on the New York Association of Business Brokers site is the sort of thing they’ll find:
As you begin your search, keep in mind that running your own business is more than a job; it is a lifestyle change. In most cases, it is a very big lifestyle change. Usually, you will be working longer hours, making all of the decisions, and, as the expression goes, “you will be the chief cook and bottle washer.” In other words, you will be doing all of the work from running the business to, in many cases, sweeping the floor and changing the light bulbs.
Most buyers are seeking to obtain the following when considering the purchase of a business:
Pride in the service or the product
Control of own destiny
Customer and employee contact
It’s important to remember that many of the things a buyer will look at are elements that are already baked into your business and aren’t changeable.
- Your business is located where it is. (If the buyer is looking to own a restaurant in Indiana, your Hawaii location is a disadvantage.)
- It is in the industry that it’s in. (If plumbing shops are selling fast, your electrical service doesn’t benefit)
- New technology may be impacting your value. (Video rental stores killed by online streaming. Cab medallion value killed by Uber. Etc.)
These issues, and many more like it, are outside of your control. Don’t get hung up on them.
What buyers want is as varied as the buyers themselves. A seller can get overwhelmed worrying about the details – that’s why it’s critical to focus on a simple approach that prioritizes the core realities that will impact almost every buyer.