According to the California Association of Business Brokers, Baby Boomers are on the verge of selling almost 12 million businesses over the next 10 to 15 years. This obviously represents a significant opportunity for Gen X and Millennial’s with entrepreneurial aspirations of their own.
The best opportunities may lie with businesses that are ready to be transferred to 2nd Generation family members due to an impending retirement, but there are also going to be a lot of Baby Boomers who don’t have a family member in line. Find a business that you’re passionate about and make sure that it can adapt to one important thing – technology!
Here are some benefits to consider when purchasing an existing business:
- Proven Concept – Buying a business with a proven concept is less risky. Buying a business with a proven concept that’s been around for a while is even less risky (although there’s always risk!).
- Recognition – It’s likely that you’re buying a business with a recognized name already. That’s huge!
- Equipment – If equipment has been updated recently, the business will have a more seamless transition. You can then focus on improving and growing the business immediately.
- People – In addition to getting knowledgeable existing employees, you can also have the existing owner stay on for a year or so to show you the ropes (looks great to banks!).
- Customers – The business has existing, loyal customers! You need to make sure to continue to nurture those relationships.
There is a great deal of initial due diligence, but the most important task is to make sure the business has been (and will continue to be) financially stable for quite some time. I’d advise getting expert help with financials. Then, research if there will be continuing demand for that type of product or service. For instance, if the business is a VHS rental store, then I’d recommend you move on. If you’ve identified ways to make the business better or continue its mission, then you’re on the right track.
There is always risk when you decide to become a business owner, but it’s your job to find ways to minimize it. (Let me repeat: Don’t buy a VHS rental store.)
The Education Center on our website has more information about the pros and cons of buying an existing business, as well as how to get started. If you’d like to talk about buying a business or have a specific opportunity to evaluate, I invite you to contact me with any questions at firstname.lastname@example.org.