10 Things Business Sellers Won’t Tell You
“Have you ever dreamed of owning your business and be your own boss?” the ad said. “Report to no one and make thousands of dollars in the process? Sign up now for our exclusive. Success guaranteed.”
There’s a hidden trend in the past 10 years or so. A trend unnoticed by the general public or the media. Unlike say, gaming or feminism, no one really made a big deal about it. But it’s a trend just as important as any others.
I am referring, of course, to none other than what I like to call the “entrepreneur fad”. Pioneered by some of the world’s best salesmen, and fanned by media praise, the world seems to have this notion that a life of entrepreneurism is the best way to live. People quit their high paying jobs to start ainstead, students drop out of school to “sell stuff on the internet”, a stay-at-home mum joins some kind of MLM (multilevel marketing) deal… the list goes on.
Yes, some of the world’s greatest companies are founded in the garage, by dropouts. Microsoft, Apple and Dell come to mind as examples. And there’s no doubt that everyone in this world has the capability to pursue anything they want in the world – that much I agree.
But there’s one common thread among these success stories: their founders started the company after long deliberation and they work longer hours than anyone else. Most of all, they did it to pursue a dream, not because they saw some ad selling businesses with “guaranteed” success.
In this article, I’m going to reveal 10 things these business sellers won’t tell you, things they’d rather no one outside the industry knew.
1. It’s Never Going To Be Easy
Running a successful business is simple: make more money than you spend and profit. Simple, however, is not the same as easy. Successful entrepreneurs are some of the world’s most hardworking people I’ve ever seen!
For example, Zappos founder, Tony Hsieh said in an interview he used to work 14 hour days, 7 days a week. He slept, ate and, really, lived in his office, with the rest of the founders. Colonel Sanders, at the ripe age of 60, went around his neighborhood selling his now-famous chicken recipe, only to be rejected by hundreds.
I highly suggest you pick up a couple of their biographies to learn the truth. If you think you’ll be able to “hang around the beach” while you “make millions”… think again.
2. It’s Going To Be Risky
Unlike a baby, your company is not guaranteed to grow up… even after you spend all your time and effort on her!
Entrepreneurs are people who are comfortable with risks, even if they manage them well. They are also a bunch of persistent people who pushes through even after they fail multiple times. These are not optional qualities to be an entrepreneur, these are a must!
Just think about all the companies that were once great but have now faded… do you think their founders have given up? Doubtful. In fact, they are probably working on the next big thing.
3. It’s Going To Take Some Luck
Even if all the financial backing and the greatest talent in the world, you’re going to need to a bit of luck to get there!
Imagine if in 2007 you started a real estate agency in the U.S. You’re not likely to succeed when the crash comes in 2008! – even if a time of depression may present many opportunities. What if you start an infomercial company today? Is it likely that you would make it?
Many companies were started at the wrong time, going against the trend of a dying industry or just before a major industry disruptor was invented. Their founders lose it all, but you know what the real entrepreneurs would go on to do next… They start over.
4. It’s Going To Take Capital
Any business is going to require capital to take off. When I say “capital”, I don’t necessarily mean financial capital, of course. It may be talent, time, effort, etc. A business is an investment and investments don’t grow if you don’t put anything in.
For example, when Sergey and Larry founded Google, the capital was two Standford University PhD candidates’ time (themselves). They also later received US$100,000 funding from Andy Bechtolsheim, co-founder of Sun Microsystems, before the company started to take off.
5. You’re Going To Fail Sooner or Later
“It’s risky, yes, but I’ll be an exception. I’ll put everything I have and I will make it the first time round.” It’s a common claim I heard first-timers say.
Are there cases where people make it the first time round? No doubt there are. Are there cases where entrepreneurs never fail for their whole life? If there are, I’ve never met one. Google product launches fail more than succeed, some can argue, and they have the world’s brightest minds and an endless supply of capital to back them!
6. The Sellers Are Not Tied To Your Success
Business sellers are often not tied to your success. Whether you fail or you succeed has nothing to do with them after the product is sold. If they offer you coaching, that service will come with a fee – and these usually don’t come with the money-back guarantee that comes with the “business”.
7. You’ll Need To Sell
No business is ever successful without a great salesmen so make sure you’re comfortable with selling! All successful entrepreneurs are great salesmen. They inspire people around them. But what is “inspire”? Inspire is simply the ability to sell the his/her idea to the people around them.
Other than your ideas, you’ll need to sell your business proposal to investors, sell your products to your customers and last, even sell the idea of starting a business to your family.
8. Additional Costs
If the price tag of the business is going to put in serious debt, think twice about purchasing it even if it is a legitimate opportunity. The reason is simple; your upfront cost is almost always never the only cost.
Remember that the initial price tag doesn’t include marketing your new business, hiring new employees, assets that you may need to purchase and sometimes you even need to stockpile inventory.
9. Costs Will Always Get Out of Hand
Every entrepreneur who have had at least a couple of years experience will gladly tell you that a battle plan goes to the bin when the first bullet is fired. The ad might say “guaranteed success” or “great cash flow” but make sure you really sit down with an accountant to work out the numbers.
Be very pessimistic when forecasting numbers. Budding entrepreneurs often think they are going to spend $10,000 on advertising, only to have that expense balloon to $15,000 due to market shifts or other unforeseen circumstances (like a competitor bid).
10. Opportunity Costs
Last but not least, ask yourself what opportunities did you give up on if you pursue a business. A business seller will always draw attention of what life could be with his product… and imply that life will decline from that point on if you don’t buy it. Do you agree with his assumption?
Perhaps getting a Master’s degree might be a better way to spend the money? Maybe a career change? What about starting a family? Or even travel the world!
What are you missing out if you start a business? Are you happy with the trade? If so, go ahead, pursue it.