Five Skills You Must Learn to Buy a Business « Clarice Letson

Five Skills You Must Learn to Buy a Business « Clarice Letson

Most people who set out to buy a business do so with very little knowledge and experience in the field. This is fine as long as you can do some homework on the key principles and skills that are needed to successfully complete a transaction. Not only will mastering these skills increase your effectiveness and odds of doing a deal, but they will boost your confidence and performance in every area of your business life.

1. You must learn to read a balance sheet and profit and loss statement. This is a little basic accounting which can give you the tools needed to analyze any company for purchase of for any reason at all. Read, compare, read, compare balance sheets. No not IBM and General Electric annual reports for your stock portfolio, the ones on small companies that we want to buy. It will give you the core understanding of finance that very few individuals possess.

2. You must learn to deal with people. This is a little broad but here is what I mean. You need to get out and visit companies. The more companies you visit, the more CEOs of companies you will deal with. Some smart some not, some nice, some nasty. In order for you to feel comfortable in this environment you need to visit 50 companies (ok even 25 is a good start – it’s not that hard, just find the sellers and set up the appointments) as a buyer which will pave the way to develop instant rapport and presentation skills needed to keep the seller interested and motivated.

3. You must learn to negotiate. Where the rapport ends, the negotiation begins. Learn to say no without ever giving the impression you are saying no. Never get unnerved or angry at any terms the seller proposes. They always ask for the Moon. Be a very polite Tiger Shark. Always believe your offer is never too low, as insulting as it might be.

4. Learn to dance. Dance around difficult questions, criticisms and deficiencies. Your credibility is always a direct function of the image and confidence you project. You will never be as big or as strong a buyer as you think you should be. Forget about it. Lay your cards on the table and let them fall where they may. If someone does not like your story that is just fine with you… there are always other sellers that will be happy to take your money.

5. Learn to move on. One must approach fifty or so deals before getting the hang of it. There are dozens of reasons not to continue negotiations with a Seller. Once you hit one move on. Do not dwell on the deal because you think it is a neat business. Some of the neatest businesses are overpriced and unbankable. Learn what makes and breaks a deal up front and as soon as a red flag emerges, do not waste time throwing in the towel.