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by Glen Cooper, CBA
It takes months to successfully search for a business acquisition. The landscape is littered with nutty sellers, part-time brokers, hidden information and outright scams.
Contacting a full-time professional business broker (or 'business intermediary') is your best bet. But, there certainly is more than one path to follow that will lead to your ideal business.
Search Your Own Networks
For many of you, with current jobs, your search to buy a business must be confidential. But, for those of you who can search openly, the best start is with your own network of friends and acquaintances.
Ask them to recommend ideas to you. Ask them for leads. Find out what they know about buying a business that you don't know.
Your attorney, your accountant, your banker, your neighbors, your relatives already think they know more than you do, right? Why not ask for their advice? They just might come up with something helpful. Begin with this step if your search is an open one.
Contact Trade Associations
Almost every business has its own trade association. The reference department of the nearest public library has an Encyclopedia of Associations. From this book, you can get the name, address and phone number of the appropriate associations. Call them directly if you know your area of interest.
Ask for a list of consultants the association recommends. Then, try calling these people. Consultants who specialize in any given field will usually know who to contact for leads on businesses for sale within their specialty.
Trade magazines which are published by the associations or by private publishers may also have a classified section for business opportunities. If you are interested in a particular type of business, subscribe to the trade journals of that business specialty.
The trade association may also be able and willing to sell you a list of their members in your area.
Cold-Call Current Owners
If you think you know what kind of business you want to own, just pick up the phone and call the owners directly. This is not as easy as it first appears, but it does occasionally work.
If you didn't get a list from the trade association, your local librarian can direct you to the general business directories for your area. These directories list businesses and the owners' names. You can also just use the phone book and start calling.
The 'cold-calling' method is often what business brokers use themselves to find listings. The advantages of this method are many, but there are also pitfalls.
There are three advantages to cold-calling. If you call the owner, you may find yourself in the unique position of being the only one who knows the business is for sale. You may catch the owner at precisely the right moment. This method also allows you to target precisely the right type of business.
The problems with this method include wasting time with unrealistic sellers, failing to get enough information from skeptical sellers, and negotiating with sellers directly. Eliminating the 'middle man' also eliminates the advantages that the 'middle man' brings.
Business owners are often unrealistic about price and terms. Buyers who arrive on the scene too early are often amazed at how long it takes some sellers to get realistic. As brokers, we spend time educating sellers, earning their trust and getting them ready to appreciate qualified buyers.
Review the Newspaper Classifieds
People often get discouraged by the necessary tedium and length of their own search and incorrectly conclude that there are no good opportunities available in the newspaper classifieds.
Don't be confused by the junk ads which also appear in the classifieds. The multi-level marketing schemes, the work-from-home-stuffing-envelopes ads, the vending routes and the once-in-a-lifetime opportunities to become an overnight millionaire can make you think all classifieds are the same. They are not.
Right next to these laughable ads are often some exciting opportunities - for the right person. Get organized before you call on these ads and eliminate the ones that don't work for you.
The questions to ask when phoning on these ads should be directed at eliminating them from consideration. Ask "What's for sale? What's the opportunity? Where's growth going to come from? How was the price determined? Why are you (or why is the seller) willing to sell this great opportunity to a stranger?" Insist on straight answers or go on to the next ad.
The Sunday newspapers often have the most complete classifieds. The Thursday edition of the Wall Street Journal also specializes in business opportunity listings.
Check Out the Internet
If you're reading this article, you're already familiar with BizBuySell. This network - our network - is the largest and (we hope you think so) the best! On BizBuySell, you can search by type of business, by geographic area, or by broker.
If you don't find what you want by searching a specific business category, search a geographic area for all the businesses for sale in that area. If that fails to turn up something interesting, start calling brokers to ask them about the other listings they have.
Brokers who sell businesses tend to be poor at clerical tasks. That means they don't always get all their listings posted! A broker who posts only a few listings may have more when you call.
There are also other web sites besides BizBuySell. But, so far, they're either regionalized, they charge buyers for retrieving data, or they are designed only for the larger mergers and acquisitions in the so-called 'middle market' (businesses over $5 million).
Call A Business Broker
In pursuing all the avenues outlined in this article, you will probably run into a business broker at every turn!
Your own network of friends will know us, the trade associations will refer you to us, and even when cold-calling current owners, many will tell you to call us. Certainly, the newspaper and Internet classifieds are dominated by brokers.
An active business broker is one who can offer you a wide selection of listings because he/she belongs to a larger network, or one who specializes in the area you want. No one business broker can list enough businesses by themselves. If they don't 'network' for you, you'll have to visit many brokers to have a complete picture of what's available in your area.
Finding a business broker who co-brokes actively with others is ideal, but rare. Most will only show you their own listings. In the under $1 million business size category, there are usually about 200-300 businesses for sale per million population of any given area. An individual broker can only handle about 20 listings at one time, so that usually means talking to at least a dozen brokers if you want a complete picture.
Expect that a business broker will register you in order to qualify you. Only about 2% of all buyer prospects who call a business broker will follow through and actually purchase a business from that broker. So, realize that the business broker is trying to discover whether or not you're among that elite 2%!
One way to look like a serious buyer prospect is to demonstrate that you're serious. You expect the broker to convince the seller to share tax returns and provide seller financing. In return, you need to give the broker your financial statement and resume to show to the prospective seller.
You may have heard about buyer brokers in real estate, but a broker who represents only buyers is rare in business brokerage. It's difficult to get the seller's trust and buyer brokers can never get enough information about the business.
In home buying, a buyer broker is able to find out just about everything there is to know from the public record. The inside story of a business is only shared with someone who is trusted by the seller.
Small business owners, when selling, feel very vulnerable. They have a hard time trusting their own brokers; their resistance to buyer brokers is worse.
Want to know more? Don't worry. When you begin your search in earnest, following the suggestions above, you will quickly be overloaded with information. Good luck!
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 About the Author
Glen Cooper, CBA, is a Certified Business Appraiser and is President of Maine Business Brokers' Network in Portland, Maine. He has been a full-time business broker and business appraiser for eighteen years. Email your comments to Glen or, visit his web site.
This article is © Copyright 1998-2002 by Glen Cooper and may not be reproduced in any format without the express written permission of the author.
The recommendations of reading, reference materials or links mentioned, are for general informational purposes only. The materials are intended as a public service and are not a substitute for obtaining professional advice from a qualified firm, person or corporation. Consult the appropriate professional advisor for complete and up-to-the-minute information. These materials do not constitute the rendering of any legal or professional services.
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