When considering entrepreneurship, people will often ask themselves, “Do I have what it takes?” In the journey of entrepreneurship, however, asking this question is not on the list of things to do. “This should not be the litmus test that we are using,” said Rob Nason, Concordia University Chair in Entrepreneurship and Society. “Entrepreneurs come in all shapes and sizes.”
The First Steps: What Does it Take to Buy a Business?
There is no predetermined genetic makeup that indicates what does and what does not make an entrepreneur.
This discussion took place during the SEARCH: How to Find a Business to Buy event at the John Molson School of Business, an event that focused on giving individuals the tools and knowledge needed to take those first few steps into entrepreneurship, specifically when looking into buying a business that has already been established. Hosted by the John Molson Executive Centre and the Bob and Raye Briscoe Centre in Business Ownership Studies, and with support from the Centre de Transfert d’Entreprise du Québec, this workshop was the first of a four-part series that takes participants through the different stages of the business ownership journey.
The first step to buying a business is to have the right mindset and to really look inside yourself. There is no predetermined genetic makeup that indicates what does and what does not make an entrepreneur. But not everyone can be an entrepreneur, mostly because not everyone is willing to take the risk and apply the effort it takes to make it work. In order to take over a business, entrepreneurs need to understand what it is going to require from them on a physical and emotional level and decide whether they are willing to sacrifice certain comforts and routines to meet those requirements, at least for a while.
So, while entrepreneurs shouldn’t be asking if they have what it takes, there are some questions they should be asking themselves:
Do I want to buy a business?
Maybe on the surface the answer is “yes,” but it is important that individuals educate themselves before jumping in.
What kind of business do I want to buy?
Entrepreneurs need to ask themselves what kind of business will fit their unique skillset, as well as their needs and wants.
What characteristics, knowledge or skills do you have that are going to make the seller decide you’re the right person to take over the business that they put their blood, sweat, and tears into growing for the past several years?
To help guide and narrow a potential buyer’s search, there are four criteria on which they may wish to base their search. These criteria offer a checklist for a new entrepreneur’s wants and needs, allowing them identify what characteristics their potential business must have.
Although people can become business owners at any stage of life, it is common for individuals to spend several years working in an industry, and then decide to branch off to run the show themselves. In these cases, the individual has the advantage of having already acquired an extensive base of industry knowledge, so this may be a driving factor in the search phase.
For those who don’t have a background in the industry, however, that’s not to say they can’t get into it, but they need to be aware of the skills and knowledge they have to offer as a selling point when buying a business. What characteristics, knowledge or skills do you have that are going to make the seller decide you’re the right person to take over the business that they put their blood, sweat, and tears into growing for the past several years?
Depending on the individual’s skills and aspirations, they may choose to base their search criteria on a company that is performing at a certain level. The two ends of the spectrum are: an underperforming company – one whose employees will likely be open to change, and that may be easier to settle a deal on because of its state of struggle; or a company that is performing well and needs to be maintained and encouraged to grow. Of course, there are also businesses that fall between these two extremes.
The lifestyle the business is going to require and the lifestyle the entrepreneur is willing to live have to match up.
A major consideration in general when becoming an entrepreneur, but especially when searching for a business to buy, is the consideration of what lifestyle the buyer will have to lead both in the short and long term. What is the willingness to travel? How many hours need to be put in daily? How far are the headquarters, plants, or other locations from the buyer’s home? Is it a global or a local company? The lifestyle the business is going to require and the lifestyle the entrepreneur is willing to live have to match up.
Although geography can be a primary consideration in the search, it is also likely that it will be present in any search, even if it isn’t the driving factor. As an entrepreneur, where do you want to be? If location is the most important factor, then the search will revolve around finding an available, unique and lucrative business buying opportunity in a specific geographical location.
Most importantly, when taking the leap into buying a business, entrepreneurs must stay grounded, educated and reasonable. It’s okay to dream big, but be aware of the other side of the coin. “Entrepreneurs are systematically over-optimistic,” Nason says. It’s dangerous to play the game of entrepreneurship with careless abandon.