This is – quite rightly – a huge fear for people. What if I plough all of this time and effort and energy into a deal and then it falls through?
People liken it to house hunting, and there are some similarities. But there are also some key differences and, unlike what usually happens when you’re looking for your dream home, it’s a good idea to take emotion out of the process.
When you’re buying a home, you’ll often “fall in love” with a property and you’re already imagining yourself living there before you’ve even had your offer accepted. Understandably, it can be a stressful process and if you miss out on the house you’ve set your heart on, or the chain collapses further down the line, it’s difficult to keep emotion out of it.
Take the emotion out of the business-buying process
In an ideal world you’ll steer clear of treating the business-buying process in this way. Yes, we’re all human and if you believe you’ve found the perfect profitable business to buy as an asset then you may become emotionally invested in that deal coming off. However, there are some sensible steps you can take to prevent that happening, which I’ll outline below.
1. Keep your pipeline full
Make sure that you’re working on more than one deal at a time. This makes it much easier for you to keep your head and walk away if a deal isn’t right, or to take it on the chin if a deal falls through. It doesn’t remove the pain completely – of course you’ve still invested your time, effort and resources – but it means you can switch your focus onto the other deals in your pipeline and you’re not starting again from scratch.
If you focus on one deal at a time and the deal falls through that’s going to delay your asset acquisition plans considerably.
2. Assess the vendor carefully
Sometimes when a deal falls through you’ll realise that you had a sense at the start of the process that it wasn’t going to be plain sailing. Although I’ve said you need to take emotion out of the process, I don’t mean that you should ignore your gut feeling about someone.
We do sometimes get a sense that all is not right with a vendor. It may be that our values aren’t quite aligned with theirs or that they have unrealistic expectations about the cash they’ll walk away with on the day of the deal. Assess your vendor carefully at the outset to avoid upset later on.
3. Consider outsourcing
One of the reasons it can feel so painful when a deal falls through is that if you’re a time-poor entrepreneur then you’re probably thinking about the opportunity cost of all that time you spent working on the deal. What else could you have been doing with that time and what opportunities have you missed out on?
A way to avoid this is to outsource. Get someone else to find businesses, negotiate deals and work through all of the legal and financial processes for you. That way you can make sure you’re only talking to motivated vendors and only looking at deals that stack up with funders. And if one deal falls through, there will definitely be more in your pipeline.
Contact us: 0161 883 1829