8 Recommendations to Help Serious Business Buyers to Separate Themselves from the Pool of Tire Kickers.

You are thinking about buying a business. Let’s face it, you most likely won’t. Neither will 990 out of the 1,000 “potential buyers” that will contact my office this year. Being a business broker in the Philadelphia area, I can tell you from experience that the bulk of buyers are not really serious and are just “kicking tires.” It does not take very long for business brokers to become callous and short with the vast majority of possible buyers inquiring about a business. Truth be told, business brokers can tell pretty quickly if a buyer is serious or not. That being said, here are a few tips to help you pass “tire kicker” status if you are a serious purchaser. Tip 1: Make up your mind that you are a serious buyer. Business brokers get telephone calls all the time from buyers who feel that they may make the leap from their weekly paycheck if they discover the right business. If you believe that you are going to uncover the “perfect business” where the risks are nonexistent and everything is ideal, you are kidding yourself. Each and every business has pitfalls associated with it. If you are really risk adverse you most likely aren’t an entrepreneur and really should retain your day job. If you have been looking at businesses for more than a year and have turned down opportunities because you don’t like the color of the paint in the broom closet, you most likely are not a serious purchaser. If you know in your heart that you are an entrepreneur and you know that you are really serious about making the jump and you acknowledge that there is no perfect business out there and that you are going to have to take on some risk, than perhaps you are prepared to become a serious purchaser. Tip 2: Let the business broker know that you have narrowed down the type of business you are looking for. There are some people out there that scan the business for sale internet websites and inquire on nearly everything. I have seen the same tire kickers over and over inquire about my businesses. They have inquired on everything from durable medical equipment companies, to commercial cleaning companies, to restaurants and bars. It is a huge red flag to business brokers that the buyer has no notion of what they are looking for and is open to nearly anything that “makes money.” Tip 3: Don’t wait forever to buy something. It is a huge red tire kicker flag when buyers reveal to business brokers that they have been searching for a business for more than a year. I have seen the same potential purchasers for several years. These people are never going to make the leap. Tip 4: Have your money ready to go. You will need a considerable amount of capital to purchase a business even if you are getting financing. If you do not have any money, please do not waste our time. Business brokers don’t want to hear that you have some mystery investor backing you because you don’t. Sellers are not going to 100% finance your transaction and you won’t have money to place down on a bank loan. If you don’t have money, you may very well be a serious purchaser, but you definitely are not a viable one. Tip 5: Have your resume, personal income statement and evidence of capital ready to go. Nothing impresses a business broker more than a buyer who immediately sends over their resume with their prior practical experience and proof that they have the funds to buy a business. If financing is going to be necessary, we need to know that you have some relative practical experience with the industry of the business that you are inquiring about. Banks are not going to fund your acquistion of a commercial construction company if you do not have any commercial construction knowledge. Tip 6: Fill out the business brokers requested information and confidentiality agreement. If a potential purchaser refuses to sign a non-disclosure or confidentiality agreement they are not really serious. They are possibly a nosy competitor or a fine case in point of the ultimate tire kicker. I have had “potential buyers” refuse to fill out a confidentiality agreement. I will not give them any details and it would have been much better if they did not even call me at all. In addition to the confidentiality agreement, make sure to provide any requested information thoroughly. If a prospective buyer is too lazy to fill out an income statement or a buyer questionnaire, then they in all probability are not that serious. Tip 7: Do not ask for any specific details about the business unless you have executed the confidentiality agreement. Your very first contact with the broker must not be this: “Hello I am interested in your Business for sale. Please send me the previous 3 years of tax returns, profit and loss statements and balance sheet.” This can make business brokers feel that you are a competitor or just a curious individual. It doesn’t give business brokers the impression that you are a serious business purchaser. Sometimes potential purchasers nag business brokers and attempt to get the location of the business or other identifiable information. Business brokers do not have the discretion to give your this information as we have a duty to safeguard our client’s business. Our clients have asked us to get confidentiality agreements executed before giving information. Please do not request us to violate our obligations to our clients. It’s annoying. The faster you get the executed confidentiality agreement back to the business broker the sooner you will get the facts that you want. Tip 8: Have a good explanation prepared for why you are seeking to obtain a business. Tell the business broker that you have been laid off from your job and are now prepared to leap into owning your own business. Tell the business broker that it has always been a dream of yours to save up for a down payment on a business and go out on your own. Tell the business broker that your family has been in the business forever and now it is your turn to go out on your own. What you do not want to do is call the business broker and have no reason as to why you are thinking about searching a business. In conclusion, if you want to stand out from the group of tire kickers, convince yourself that you are serious, narrow down what you are looking for, don’t take too long to acquire something, have money ready to go, send over your resume, income statement or evidence of funds, execute the business brokers confidentiality agreement and completely fill out any requested information, don’t ask for specific information prior to executing a confidentiality agreement and have a good explanation as to why you are seeking to buy a business. If you do all of these things, you will naturally standout from the group of tire kicker buyers and be acknowledged as a serious purchaser.

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