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Re: Business Purchase Posted by Justin VanAbrahams [Email]  (#32) [Profile/Gallery]
(more from Justin VanAbrahams) on Tue, 24 Oct 2006 12:38:09
In Reply to: Re: Business Purchase, NickR, Mon, 23 Oct 2006 05:36:52 Members do not see ads below this line. - Help Keep This Site Online - Signup |
Unfortunately, the only way to demonstrate that you've got everything in line is to write that business plan. It's somewhere between difficult to impossible to explain to someone exactly what you're planning to do, and anyone who is - for whatever reason, in whatever capacity - going to throw you hundreds of thousands of dollars wants to know and to see that you've got every possible detail looked at and accounted for. They are going to want something to hang onto, a measure to which you're accountable.
When you're talking about small amounts of money ($10,000, $20,000) you'll find people willing to take risks based on your enthusiasm and ability to communicate your idea. When you're talking about the kind of money you've indicated, people want hard numbers and clearly written plans.
If you pursue a partner, you may be able to get them excited about the idea just by talking, but they know they'll be in the passenger seat along for the ride... They'll be able to steer now and then, read the map, and give you some pointers. They have hands-on control of their side of the investment, and so at least mentally their risk is somewhat mitigated.
With an investor, you are effectively asking somebody to give you a bunch of money and wait for that phone call saying "We're rich!" If you have a proven track record of success, that might work, but if you're some schmo like me, you are going to need a business plan to prove to them you've got your ducks in a row, and have considered all the angles.
I think when you're buying an existing business, that plan actually becomes all that much more critical. If the the business was successful, and capable of the returns that VCs want, why in hell would the existing operators bail? Unless there was a death involved, it's a tough argument to convince anyone with lots of money that someone would walk away from lots of money for a paltry $800,000. I'd go so far as to say an impossible argument.
The reason they walked away was lack of vision, so the secret sauce here is you. Your understanding of the business and your talent and skill to run it in a new, profitable way. Besides, seeing it all on paper helps you double-check your own mental work and make sure you've accounted for everything.
Side note: Don't tell anybody you can't focus on one thing for too long. :)
posted by 216.57.64...
, Sun, 22 Oct 2006 02:12:36, Sat, 21 Oct 2006 23:52:24
, Mon, 23 Oct 2006 08:50:46, Tue, 24 Oct 2006 12:38:09 <-- Viewing This Message
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