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What are the success rates for 1st time business buyers. Any statistics available?

There are statistics that show 3 out of 4 business startups fail in the first five years. Are there analogous statistics for first time business buyers? How often do these new buyers of existing businesses fail?

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Answers (3)
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allgreen Air Conditioning, Refrigeration
Technician / Owner
San Bernardino County, CA

Of course the answer to that question is a solid "that all depends" :-p

Any salesman worth their salt will use the "hot potato" answer technique, and here it is;

What are the success rates for 1st time business buyers compared to the failure rates?

Answer; how much experience, skill, money and stamina do you have?

If you have alot of all the above, good news! you're almost destined to succeed. If you're shy of the mark on some, any or all of these attributes, then good news! Save your money, don't get into business and expect to succeed.

Another way to answer this question;
What are the success rates for 1st time business buyers compared to the failure rates?

How often do you succeed at other endeavors in your life?
Have you ever succeeded in another enterprise? Are you generally a successful person?
Are you good at what you do? Do you know the secret to making money without working?

If you answer YES! to most or all of those questions, then by all means, move ahead and rest reasonably assured that you too can become a success statistic.

Good luck with that. All the best.

Russ Sahagian
allgreen HVACR Company, Apple Valley, Ca

PS: the secret to making money without working? (I just knew you'd ask)
Do what you love.

May 2, 2009
Steven St
World Business Partners, Inc
Los Angeles County, CA

Brigham's answer was spot on.

Comparing a start up to an established business is apples and oranges. Once a business gets to the stage of the owner selling it, most if not all of the start up pains have been addressed. Especially business with 5+ years or more.

Start up usually lack the funding, management or both to really go anywhere.

It's hard to really put a number on how many businesses go bad after selling because there are many factors that come into play. I'd say the number of businesses tht fail with a new owner is also small and a lot smaller than the number of start ups that fail.

May 1, 2009
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United Business Brokers
Maricopa County, AZ

Several years ago I was quoted 80% success rate. Now, it appears it's more like 60% based on the research. "Success" vs. "Failure" can be a blurred line though. If you're asking if the business performed as expected for the buyer - then that number is around 50%. If you're asking if the business is still around after 5 years, then that number is probably around 80%.

The problem with most small businesses - the owner becomes the business and the business can no longer grow. (Read Michael Gerber's E-Myth). While 9 out of 10 startup businesses fail within 5 years, you do have a much higher probability of success with an acquisition.

A wise seller (especially if there's seller financing involved) knows he/she has to price the business correctly to make the deal work for the buyer - it has to be a win-win for everyone involved. But you do find those sellers (a LOT actually) that just want to screw the buyer by trying to hide pertinent facts, or overprice the business where it simply wouldn't make sense to buy it.

A good idea is to use a broker who's working exclusively for you to find the right business. But good luck. The business brokerage industry hasn't yet evolved to the level the real estate industry has. Most brokers still, unfortunately, represent only the seller - not you.

Buyer beware.

May 1, 2009

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