What type of buyer are you? It’s important to know.

If you are thinking about buying a business, it’s good to know how you’ll be viewed in the marketplace.

Sellers and brokers are very weary of buyers. Statistics indicate that approximately 90% of people who inquire about a business never buy one. The lineup of "tire kickers" is endless and can include people without sufficient funds to acquire a business; people incapable of running a business; competitors, customers, or suppliers who are trying to figure out what is for sale; and bargain-hunters with unrealistic price expectations.

Here is a generalized categorization of buyers and their experience levels:

First-time buyers

Most inquiries received by brokers are from first-time buyers. Because this is their first time, many have very little knowledge about the business acquisition process, how businesses are priced, or what their expectations should be. It's hardly ever easy to get the individual first-time buyer through an acquisition – they are usually squeamish. About 90% of these buyers don't know exactly what they want, and only a very few buy the business they first inquired about. These buyers should always attend Buyer 101.

Income-replacement buyers

For a variety of reasons (layoffs, corporate downsizing, burn-out, job relocation, etc.), many potential buyers are exploring buying a business to replace the income from their job. Often, those buyers lose interest after they gain a better understanding of the required investment, the amount of work, and the risk. Some of these folks end up buying. Many review 10, 20, or even 50 business opportunities. These buyers would also benefit from Buyer 101.

Mid-level executive buyers

What about the 10% of the buyer pool that is not "tire kickers"? Although there is no such thing as a typical buyer, one group of legitimate buyers are mid-level executives from the corporate world who have entrepreneurial dreams and have saved just enough to afford a business that can replace their current employment income. Some advanced review and offer strategies are covered in Buyer 101 for these buyers.

Serial entrepreneurs

Another type of buyer is the former business owner - an entrepreneur who has “done it before” and is interested in doing it again. Having been through the process of acquiring and building a business before, they can typically reach a decision sooner than a first-time buyer, and the whole process has the potential to be more efficient. But this type of buyer may be a lot tougher negotiator, and it may be much more difficult to reach a mutually beneficial agreement.

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