1. Refusing to sign a confidentiality agreement and/or demanding the business financials before signing a confidentiality agreement. It tells the broker that you have never purchased a business and don't understand the process.
2. Brow-beating the seller, or trying to chisel him down to the last nickel. It’s a good way to end up without the business. If a Seller is not desperate, he/she will seldom sell to a buyer that has been rude, obnoxious and disrespectful.
3. Not doing your due diligence. Is the business making the numbers that have been represented? If you don’t know how to determine that, then get an accountant to review the numbers and explain them to you. Do you know what licenses are required, and can you get them?
4. No experience in running the type of business your interested in buying. What skills do you need? Have you taken the time to identify them?
5. Not enough working capital. Three to six months capital is standard.
6. No marketing plan. How are you going to increase your sales?
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7. No business plan. At the very least you should have a plan of how you are going to operate the business once you take over?
8. Fear of taking risk. If you are not willing to take any risks then business ownership is not for you.
9. Not breaking away clean when you decide the business is not for you. Contingencies give the buyer the right to walk away from the transaction if certain terms are not met to their satisfaction. There is no need to threaten lawsuits simply because some contingency has not been met to your satisfaction in order to get out of the contract. The vast majority of the time the seller and the broker are off to another buyer by the time you walk out the door.
10. Not treating the seller with the proper respect. Sure, it is your business now, but you should still show the previous owner the respect he deserves. Remember, he was successful at this business and probably has some trade secrets that he will share if you are willing to play nice.
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