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10 Major Mistakes Business Buyers Should Avoid - Making Assumptions

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mistakeMistake #2 - Making Assumptions

Something changed in your life and you decided to own a business. You could probably start it from scratch, but considering all pros and cons decided to acquire an established business. Well, it's a very wise decision as long as you do it right. Unfortunately, new business buyers make many mistakes that make business acquisition much harder, some times causing substantial financial and emotional hardship, other times loss of otherwise promising business altogether.

 

Let's review 10 major mistakes that business buyers make that prevent them from successfully buying a business.

 

Mistake #2 - Making Assumptions

Not long ago we were selling a Mexican restaurant. One buyer approached us with high level of interest. During our conversation he said: "It probably won't work because I am not Mexican..." He immediately assumed that Mexican restaurant should be owned by a Mexican. I wouldn't argue, majority of them probably are, however in this particular situation the restaurant was owned by a Korean couple, and they've been successfully operating it for over 5 years.

Another buyer came to us interested in buying a hair salon that we were selling at that time. The price was $100,000 and the buyer told us that all he has is $10,000 for down payment. When I said that it's probably not enough, he responded: "I put 10% down when I bought my house, so I gonna do the same here...." He immediately assumed that buying a house and a business is the same thing and financing should work identically.

It is very dangerous to make assumptions, simply because assumptions are based on your own life experiences and your own judgment of a situation. It is quite common to assume that another person is thinking the way you do in similar situation, or they will act the exactly same way as you would. The problem is that all people think differently, and misleading assumption can be made simply because you don't know the subject well and you don't have all the facts.

Nobody knows everything. That's why you should give yourself benefit of a doubt and ask questions. Even if you think that you know the answer, remember you may be wrong. Asking questions will set the record straight and you won't lose a good deal over a simple misunderstanding.

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Guest Thursday, 27 April 2017