How Much Experience is Necessary in the Business You're Buying?

An interesting question that often arises during a business sale is the level of "experience" required by the buyer of the business. For instance, if you own a printing shop and listed it for sale with a business broker, what would the ‘ideal' buyer profile be?
Many times, business buyers are put off by businesses that they do not have 100% relevant experience in. While it is certainly good to have a background in the industry you are considering purchasing into, don't limit yourself as this could close doors on opportunities that you might otherwise have considered.

How much experience is enough?

There are many business buyers who will only look at companies for sale where the skills required to run the business are already possessed. For example, a person who is a great cook may limit themselves to only looking at restaurants for sale or other food related businesses. If this fits into your comfort zone, don't deviate from this strategy. However, if you are comfortable at considering other businesses for sale that may not fit your background perfectly, you may find that it opens up many more opportunities for you. For instance, consider the example of a printing business for sale. If you did not have a background in printing would this disqualify you from buying and successfully running a printing business? Not necessarily. If a person demonstrates that they have an aptitude for a certain business then that is a good start. Perhaps they are willing to learn. If so, buying a business where the old owners stay on for a period of time to train and transition the buyers properly could mitigate some concerns.

What if you don't bring "core" skills but do possess other relevant attributes?

An interesting thing to consider when buying a business is that even though you don't have the "core" skills of the business you might bring other strengths to the table that aren't necessarily "core" but could be used to grow the business nonetheless. Going back to the printing shop example, there are many print businesses for sale that are owned and operators who are "printers" by profession. These are businesses that are run by professionals who are knowledgeable about the various intricacies to the printing process. A new business owner, however, does not need to be a "printer" per se. A new business owner might have a background in sales and marketing and recognize that they might be able to use these skills to grow the business while they "farm out" the technical part of the business operation to specialists instead.

Could knowing a market very well be a mitigating factor?

Another thing to consider is that even though you might not know the core technical aspects of the business, you might know the market very well. As an example, owning a bar or restaurant. Suppose you were very well know in the city of Hamilton, Ontario and had a strong reputation throughout the local community. This could potentially serve you quite well in the hospitality business. Compare that to a person who worked in a large Toronto restaurant business but did not know the Hamilton market at all and was seen as an "outsider". They local person might have the upper hand even if their business background isn't in the hospitality business.

The point is that, when you look at businesses for sale, look at them through the prism of the strengths that you can personally bring to the operation. If you think your unique skills, abilities and strengths can grow a business into something even more than it is, don't limit yourself to a small niche and close doors to other potentially profitable ventures. Work with a business broker to go over the businesses you are interested in but also to let them know what your strengths are. You never know what you might find.

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