Why Would a Business Owner Sell a Successful Business
It is easy to assume that any business that is for sale must be failing. Part of that is our innate assumption that no one would ever voluntarily give up something that was making them money (especially if they built it themselves). But people are not actually the economic models of enlightened self-interest we learn about in school, and there are a lot of perfectly valid reasons that someone would sell a successful business.
Simple Burnout: This is far and away the most commonly cited reason that people sell a successful business. Simply put, it is human nature to seek novelty and challenge, and if a business has stopped providing those, it may become more of a psychological liability than an emotional asset. Of course, burnout is also commonly triggered by repeated and failed attempts to solve a critical problem with the business, so this is an answer that should inspire a lot of in-depth examination of the businesses’ employees and processes.
Partnership Problems: Many businesses are started by two fully interested and fully invested people who unite their funds to create a shared dream, and many of those businesses collapse a few years later when the dream is not shared anymore. When two partners have a successful business but have a falling-out for personal reasons, in many cases, the most reasonable solution is to sell the business to an outside party.
Unrelated Debts: This is probably one of the best reasons you can hope to hear when you inquire as to why a business is being sold. If someone is running a successful business on one hand but got into a bunch of debt (that is not related to the business) and needs to sell it in order to pay those unrelated debts, the buyer usually wins out.
Lifestyle Change: This is another fairly hope-inducing reason for a sale from a buyer’s perspective. Someone who was able to hold down a 60-hour-per-week entrepreneurial lifestyle before (they got married/their child was born/their spouse passed away/etc.) and just does not have it in them anymore can get great relief from selling their business. And you as the buyer can potentially profit enormously from their relief!
There is Not Always a Good Reason: Of course, we would be hugely remiss if we did not mention the obvious; sometimes a business is for sale because something is going (or is about to go) horribly wrong. For example, if you look for businesses-for-sale and you see dozens of businesses in the same industry, you should check for some legal change that is going to make that business model collapse in the next year or two (or just avoid them in the first place).
Naturally, there are also the reasons that any business can fail; mismanagement, brand or reputation crisis, industry recession, poor overall economic conditions, etc. And these are the types of business listings you need to avoid.
How to Approach a Business Purchase: Every business is unique, and there are bound to be unique sets of circumstances that prompt a seller to list their business for sale. You should not assume that a business owner has a strictly economic motivation for selling; take the time to get to know the seller and listen to their story intently. The more you can identify a personal reason for them to be selling the business, the safer you can feel about buying it.
To help you with this process, it is best to work with a business broker. Business intermediaries handle countless transactions between buyers and sellers each year. They can consult with you and help you analyze the current businesses for sale to determine which ones are viable options, and which ones will fit your budget, interests, and abilities.