It’s likely that while looking for a business to buy you’ll spend quite a bit of time and look at many, many businesses
What started out as a very clear set of selection criteria becomes murkier as you look at a number of businesses and compare them.
You’ll refine this process for yourself. In the meantime we have some suggestions:
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If your gut tells you it’s got legs – push on. If your gut tells you it’s a dog – run. If your gut is giving you a niggling feeling of indigestion but you generally like the fundamentals – that’s normal; keep digging.
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We have a theory that buying a business is like finding a life partner – there’s only one! Just because no one has bought the business yet doesn’t make it a bad business. The best owner and the business just haven’t met yet.
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No two or twenty-two businesses will ever exactly fit with industry benchmarks - there’s always some reason the benchmarks don’t apply so don’t rely too heavily on them
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All successful businesses have a competitive advantage – that thing that sets them apart from the rest. Average performing businesses often just need their competitive advantage refined. A well priced plodder business will likely represent more opportunity than a top flight winner that may have run its race.
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When you’re looking at the financials, comparing businesses, make sure you are comparing like with like i.e. have you considered the commercial rate of rent, what owners need to be replaced by staff, what revenue streams are fixed / contracts vs discretionary subject to an economic tsunami?