What Type of Business Should You Buy?

When considering purchasing a business, it’s essential to evaluate your background and skillset. Think about how you’ll manage the business on a daily basis and what unique abilities you bring that the current owner may lack. These strengths can help propel the business forward.

Ideally, the business you buy will align perfectly with your profile, leveraging your experience in a sector where you already have expertise. This alignment makes it easier to secure financing from banks, gain trust from suppliers, and communicate effectively with customers using industry-specific language.

However, don’t be discouraged if you find a promising business outside your expertise. If you can envision ways to make it succeed, it might be worth pursuing.

For example, I have a background in finance, growing media, and telecommunications start-ups, while my partner is a systems-oriented tech expert. Despite our limited knowledge of the construction industry, we purchased a construction company. By identifying the business’s strengths and weaknesses, we managed to triple its size in three years and sell it for over three times our initial investment.

We turned the company’s weaknesses into opportunities. The business lacked modern technology and relied on outdated marketing methods. By shifting the marketing budget from print to digital advertising, we generated more leads per dollar spent. Implementing systems to support home sales and construction made our services more transparent to buyers, increasing our lead-to-sale conversion rate and streamlining the building process.

I’m not suggesting you buy a business you can’t manage. Instead, when you find a business you like, don’t dismiss it because it doesn’t meet your ideal practices. Identify its shortcomings and incorporate them into your growth strategy. Consider how you can enhance current business practices or refine the business model to elevate a good business to greatness.