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Thoughts to ponder when buying, selling a small business

Recognize thought process of buyers, sellers when dealing

Posted: May 10, 2008 1:23 a.m.
Updated: July 11, 2008 5:03 a.m.
 
The advantage to my readers of my column is that you get the benefits from either what I'm currently doing or the research brought about by a reader's query. Today's column is a result of the latter.

When one of my readers asked for information about selling a business, I realized that this wasn't something I was familiar with so it entailed doing some research. What follows is a part of that research that might prove useful to some other entrepreneurs that follow my column.

There isn't a small business owner who hasn't ever considered selling his or her business. Is there an individual with some money, talent or an urge for independence (often only the last) who hasn't thought about owning his own business?

The number of small businesses actually bought and sold, however, represents only a small fraction of those who have felt these urges. To many people, the desire to buy or sell is only a passing thought. Others find various ways to solve their problems or satisfy their ambitions. But sometimes an individual doesn't follow through because he or she finds the prospect of buying or selling a business too baffling.

Let's take a look at the process of buying and selling a small business and establish some guidelines. It will not remove the difficulties, but it will make them more manageable.

It will be helpful to take a detailed look at what happens when a business is bought or sold.

First, consider some of the thoughts that go through the minds of the buyer and seller during the decision making process.

The seller begins by thinking, "Shall I sell my business? What is it worth? How can I find a buyer?" Then during the transaction the seller thinks, "How much shall I tell this guy about my business? Will he raise his offer? What terms shall I insist on? Then after the sale there is the inevitable thought, "Should I really have sold? I wonder if I could have got more money.

"I wonder how the business is getting along."

The buyer goes through a similar thought process with a few variables. During the transaction the buyer thinks, "Shall I buy this business? I wonder why he really wants to sell. How much can I afford to pay? Where can I get the rest? How far will he reduce his price? "After the transaction he or she thinks, "Now that I've bought it, which new idea shall I try first? Should I have known that would happen? It's going to work out just fine, isn't it?"

These are typical thought patterns that mark the flow of decisions in the transaction. They also reflect the doubts and hesitancy involved in the decision making process.

Commentary by Maureen Stephenson, a local author and owner of REMS Publishing & Publicity. Her column represents her own views, and not necessarily those of The Signal.

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