How successful are business brokers at selling their clients’ businesses? We’ve talked previously about some discouraging statistics in this industry, specifically the fact that most M&A firms close between 0-3 transactions per year. Richard Parker, of the Business Buyer Resource Center, lists more unhappy truths about the business of buying and selling businesses, including this one:
- Only 10% of would-be buyers will actually purchase a business for sale.
This means nine out of ten people who want to buy a business will turn away from their goal at some point in the process. They want to own a business, they may have the capital and the experience to run one successfully, but they do not purchase one. So many Americans say it’s a personal dream to own their own business. Fifty percent of Americans either currently own their own business or say they would like to. In fact, since the 2008 meltdown, even more people say they prefer to go out on their own rather than climb the corporate ladder. They are more willing to take the risks and do the work because they know the game has changed. So why don’t they?
First, they do not know what they are doing. Buying a business is like most of the things we do – it’s hardest the first time around. Because it involves making a number of complex decisions and investing a significant amount of money, however, purchasing a business is even more intimidating. A lot is on the line: money, time, career, and, yes, ego.
How do you know what type of business to buy? How do you know which businesses are economically viable? How do you know which specialists to involve in the process so that you’re not exposed to unnecessary risk? What are the pitfalls of the process and which ones are ones worth worrying about? Will you be able to adequately run the business that you decide to buy?
All intelligent people ask these kinds of questions before making a large commitment, and it’s nothing to be embarrassed about if you do not know the answers. That is exactly why business brokers exist – because an experience broker has the experience that will help you answer those questions and buy a business that will be a good fit for your experience and your investment.
A good business broker will act on your behalf to determine if the listings that you are looking at are viable, if they’re a good fit for your experience and skill set, and what the challenges will be once the transaction is complete (there are always challenges). They can point you to resources that will help you navigate the transaction and even prepare yourself for ownership.
Unfortunately, not all business brokers are created equal. A number of them think of themselves as introducers rather than M&A advisors or brokers. As mentioned above, the average M&A firm will only close 0-3 transactions a year simply because their process is more about making connections than about following through and making sure that every part of the process is completed in order and in a timely way.
If you would like to talk to an M&A firm that has a proven record of bringing together buyers and sellers and closing those transactions successfully, call Calder Capital today. We would love to discuss your situation with you and advise you about your options. Don’t let your dream of owning a business fade just because you don’t know where to start or how to proceed.