It's not easy. Nor is it quick!
Our data, which is supported by international data, suggests it generally takes on average 2 to 3 years from the time you make the decision to 'consummation' – buying a business!
Strikingly, and more importantly, it seems that more than 90% of the practitioners who start on the journey to buy a practice (pharmacy) never actually buy one. For some it is a function of priorities changing. For others they just didn't find what they're looking for.
Today's newsletter is brought to you courtesy of the Medici Capital Ownership Ready Workshop. The next program is being held in Melbourne on Tuesday 23rd April & 30th April 2013 (two part evening series). Dates are also scheduled for Sydney and Brisbane.
This week we'll cover the key messages in the first part of the Medici Capital Ownership Ready Workshop.
- Are you ready to buy? and
- How to buy?
Next week we'll look at some further issues.
Are you ready?
Are you ready to become an owner?
To answer this question you will need to understand yourself as well as constructively assess your management abilities. Many good technical people (professionals and technicians) often believe that the natural progression in their career path is business ownership.
But, in some cases, buying a business can be a recipe for disaster.
Professional competency does not guarantee business success. Nor does professional competence equate to commercial competence.
Also, the transition from good and competent practitioner and/or manager to a successful business owner is a long journey requiring a range of skills and a willingness to learn new ownership skills.
The Medici Capital Ownership Ready program uses a self-assessment checklist to assess your:
- Motivation
- Personal Readiness
- Personal Skills & Experience
- Financial Capacity
- Personal Strengths and Weaknesses
The above list highlights a range of issues that you must consider to ascertain whether you are ready to buy a business. More importantly, it is critical that you honestly self-assess your readiness to buy.
How to buy?
In most markets, business brokers play a vital role in the sale of businesses.
They are often the first and obvious step to buying a practice. Communicate with them regularly. But it is key is to be clear about what you are looking for. Have a concise outline of what type of business you are looking for.
Many brokers complain about the 'tyre kickers' who want to see everything but buy nothing.
You'll lose traction with the brokers if you are seen as wasting their time.
Vendors are the next party you'll need to contend with if you are serious about buying a business.
Remember that often the business is the vendor's pride and glory – they built it and will no doubt see more value in it that you will initially.
Respect their confidence and deal with the information appropriately.
Also endeavour to understand the vendor's motivation for selling as well as their personal contribution to the business results. For many professional practices, the goodwill is often personal and unlikely to be transferred to the new owner. For some practices, like pharmacy and optometry, the goodwill may be locational and 'market offer' (brand) or staff related.
Next week we'll deal with:
- making an offer
- financial assessment
- due diligence
This is only part of the program covered in the Medici Capital Ownership Ready Workshop. The next program is being held in Melbourne on Tuesday 23rd April & 30th April 2013 (two part evening series). Dates are also scheduled for Sydney and Brisbane.
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