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One Trap You Must Avoid When Buying a Business

As seen on Forbes.

Salivating at the idea of business ownership?

As an aspiring entrepreneur, you might be scheming in your head on how to jump right over the “startup” part and land right into instant business ownership.

And why not? With thousands of businesses and franchise opportunities for sale, it’s certainly a viable strategy. But a word of caution: If your arms are tightly clutched around this concept and you think you’ve found the perfect opportunity; it might be time to ask yourself one key question first:

“Would I be interested in this type of business if it wasn’t for sale?

Okay, you might be thinking, “What does that mean?”

Take a minute and walk through this story with me. If you don’t, it could cost you your sanity and tens of thousands of dollars out of your pocketbook…

A dear friend of mine gets wind of a certain business being for sale. He’s super excited. Can barely contain himself.

It’s a business he’s known about since learning how to ride a bike at age 6. Friend of the family owned it. Grew up around it.

Now — forty years later — it’s for sale.

With visions of sugar plums dancing in his head, he first sees nothing but purple mountain majesties and amber waves of grain. Sugar and spice and everything nice.

In other words, the perfect business opportunity with not a pothole in sight.

So I ask him the question; “Would you choose to be in this specific (fill in the blank) industry if this company wasn’t for sale?”

“Ah, excellent question Eric. Let me get back to you on that one.”

Yes — please do.

My purpose in asking him? To discover if he would have strategically chosen this business based on his competence, interests and passions.

Or, on the other hand, to figure out whether he is just being opportunistic. Simply buying the business because it happens to be for sale.

Believe it or not — the answer to this question can make all the difference between happiness in your new business vs. complete and utter dissatisfaction.

If you don’t get clarity on this, disaster may strike.

Imagine being so blinded into buying a business in children’s clothing just because it is suddenly for sale. Pushing through the process at the speed of sound because there are other bidders.

Doing whatever it takes to close the deal. Not really thinking it through. Just flat out in a big hurry.

Eighteen months later. Smack. Right up side the head.

What up-side the head? Pure reality. The “uh-oh” moment — which is vastly different from the “ah-ha” moment:

“You know, this isn’t even fun. This business is actually a bummer. Why is this such a bummer?  Oh, I know why. I don’t even like the children’s clothing industry.”

Yes, that was me. All opportunity and no strategy. No figuring out where my passion and competencies intersect. Just flat out being opportunistic instead of strategic.

Don’t let this be you.

Ask yourself: Am I just being opportunistic? Or am I being strategic in buying this business?

The good news for you? You have a chance before you buy to really think this through. So many coaches advise going through some kind of ideal life planning first.

The idea? Be strategic. Plan your ideal life, then buy (or build) a business that fits your ideal life.

You’ve got to know where your passions lie and what you’re good at. Competence and passion.  Intersection of the two is business ownership heaven.

Here are 3 more critical areas to look at before slapping down your hard earned cash on a new business:

1.) Your Ideal Life

Can you picture it? The perfect life?

What does your Ideal Life look like? What does it feel like?

Imagine doing the things you want to do everyday. Living where you want to live. Spending time with the people you want to spend time with.

Can you see it? Good. Now write it down. Describe it.

When you finish, you should have a pretty detailed description of what your ideal life looks like. And this is key for you as an entrepreneur — because if you’re buying business where you’re in control, why not aspire to have the life you want?

2.) Your Passions

After defining your Ideal Life, the very next thing you need to ask yourself is what you’re passionate about. Seriously, you’ve heard the question: What would you enjoy doing every day for the rest of your life without getting paid for it?

Well — what is your answer?

If you don’t have an answer, you need to get one figured out.

Believe me, as a business owner, there will be days where you’re just flat-out done. Ready to give up. And so you can see where the value of working in an area of passion comes into play. You may be ready to give up, but you won’t. Why? Because you’re passionate about it.

3. Your Natural Talents & Gifts

You have amazing gifts and talents. Unique and special to you.

And why is it critical right now to figure out what these are for you as a business owner? Let me share a quote from [entity display="Richard Branson" type="person" active="false" key="richard-branson" natural_id="faris/4954"]Richard Branson[/entity] to clear it up really quick:

“As an entrepreneur, I learned that surrounding myself with people who were better than me at specific tasks put me at an advantage because I was free to focus on the things I was good at.

Bottom line? It’s pretty important for you to take the time to figure out these natural gifts and talents of yours to be sure they align with the business you’re buying.

So there you go. You have officially been warned. Believe me, you’ll find countless stories of regret out there. People stuck in the wrong business. Suffering.  All because they didn’t ask themselves some simple questions up front.

So at a minimum, avoid this demoralizing trap and ask yourself one question before you spend your money; “Would I want to be in this specific type of business if it wasn’t for sale”.

As I wait to hear back from my friend, I would love to hear from you. Thinking of buying a business? Bought one and have a great story to tell? Share please!

NOTE: If you don’t know me, I’m Eric. Husband, father & life-long entrepreneur

If you’re an entrepreneur, let’s you and I connect right here.

Seriously. Here’s a killer formula:

Your Wisdom + My Wisdom = More Success

My email is: eric at mightywisemedia dot com.

(You can also find me hanging out on Google+, Facebook or Twitter @MightyWiseMedia.)

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About the Author: Eric T. Wagner is a husband, father and life-long entrepreneur. After starting multiple businesses, Eric is now focused on helping other entrepreneurs find the path to success in business and life. You can also catch his gig on Forbes or connect with him on Google+.

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