You can buy your American Dream from someone else
The American Dream has many components, but the big three are: liberty, business ownership, and home ownership.
The order of my list is intentional. Liberty is prime because it makes the other two possible. And business ownership has produced a jobs-creating economy, making homeownership a reality for millions of Americans. Liberty is our inalienable right as Americans, while homeownership is possible for all Americans, but not guaranteed. Business ownership, however, clearly is not for everyone.
For most of us, when the entrepreneurial sap starts rising in our bark the first thought is typically to start from scratch—a.k.a. a start-up. It’s a natural process to envision your new business and then set about creating it out of whole cloth. But maybe someone has already created it. Consider these three points before you start from scratch.
1. Think of your local marketplace as a Honda Civic with five really big guys already crammed in it and you want to get in that car with them. It’s possible, but guess who’s gonna get squeezed? That’s right—and you get the console. Ouch!
That’s what it feels like when you add a new business to a marketplace. The folks already there have the best seats, and you get what’s left. I’m not saying it can’t be done—I did it—but it’s a rough ride. And remember, the console doesn’t have a seat belt.
2. Look at that fully-occupied Civic another way. Let’s say you talk one of those five big guys into selling his seat. This time you get a real seat, with a seat belt. In the marketplace, that seat represents an existing location, a known brand, phone numbers, website, vendor relationships, experienced staff, and most importantly, customers and cash flow, which represent your seat belt and air bags. With this plan, your first day as a new owner won’t be day-one of your business.
3. The biggest lament for every small business dreamer is, “How do I get the capital to fund my new business?” Here’s some really good news: almost all small business sales involve some seller financing. So when you’re talking to that big guy about selling his seat, be prepared to discuss how the two of you can be creative in developing a multi-year payment plan that combines your investment and his financing.
And before you convince yourself that the price tag of that seat is too high, compare it to the cost of replicating the existing customers, cash flow, contacts and good will that come with that acquisition.
Write this on a rock …Remember: even if you buy a business instead of creating one, you’re still going to have the hardest job in the world.
For a short video from Jim on this topic, click here.
Jim Blasingame is creator and host of the Small Business Advocate Show. Copyright 2013, author retains ownership. All Rights Reserved.
