FAQ. What’s the best business to buy?

September 27, 2021

by a professional from University of Southern California - Marshall School of Business in North Palm Beach, FL, USA

(There are several answers to this question, depending on who’s asking. In a few separate postings I’ll cover this topic on the basis of my own investments and 30+ years of training and guiding searchers to worthwhile done deals.)

[An answer.] The best business to buy is the kind of business for which you will immediately be the first choice of brokers, sellers, and owners.

Rethink your targeting and messaging if brokers and sellers don't eagerly pursue you.

Too many searchers don’t know how to position their messaging. It's vital to convincingly show how you will successfully migrate from what you've been doing in your career to what you want to do. Especially if your target businesses do not directly relate to your resume.

It's not enough to say "I can do it." Show supporting evidence. Upfront.

Reply by a professional
from University of the District of Columbia in Dallas, TX, USA

The best business to buy is not defined by the industry name but by critical factors that ensure long-term success. First, consistent cash flow and profitability are essential to guarantee financial stability and a solid return on investment. Second, the business should operate in a market with stable or growing demand to minimize risks associated with declining industries. Third, operational independence and scalability are crucial; businesses with streamlined systems and minimal reliance on the owner offer easier management and growth potential. Fourth, a loyal customer base and consistent revenue streams provide reliability and reduce customer acquisition costs. Finally, the business valuation must align with industry benchmarks, ensuring a fair price while mitigating risks. Focusing on these factors enables a strategic and informed purchase decision.

Reply by an member
from University of California, Los Angeles in San Diego, CA, USA

Thank you for the insight!

+1 more reply.

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