Here are 5 lessons I learned from selling my laundromat last year that can help you as a prospective business buyer.
Lesson 1️⃣ - Listing sites can be a legitimate way to buy and sell a business.
I will often hear people say that they’re not even going on listing sites because “they only have bottom of the barrel listings,” but this has not been my personal experience. I found my laundromat on BizBuySell, and I sold it through that site as well.
I still absolutely think it’s worth networking with business brokers and doing direct outreach to business owners, but you don’t need to take listing sites off the table.
If you’re sending out a lot of outreach messages on listing sites and you’re not hearing anything back, it may have more to do with you than the platform.
The number one mistake that I saw buyers making was jumping right into negotiating (and not very good negotiating at that) without first spending the time to build rapport. Things like:
🚫 “I need seller financing. How much will you offer?”
🚫 “This seems priced too high. Shouldn’t it be at a lower multiple?”
Here’s the thing. I was willing to offer some seller financing, and I was fine discussing the multiple. But I have to get to know you first.
The buyers I resonated with, who I believed in as operators–those were the people I was willing to be flexible with. Those were the situations where I was looking for ways to make it work.
Don’t come out the gate haggling, or even discussing the terms at all. Introduce yourself. Why are you interested in this business? Why should the broker/seller take you seriously? What are you bringing to the table?
There will be time to negotiate. But it shouldn’t feel like a fight.
I guarantee you are more likely to secure favorable terms if the seller likes you and can imagine you as a great operator for the business. It’s your job to convince them of this.
Lesson 2️⃣ - When selling a business, there are a lot of time wasters. Don’t be one of them.
There were different ways that potential buyers wasted my time. Some had clearly heard about buying a laundromat on YouTube and just wanted someone to listen to their brilliant plan to buy five laundromats in the next year.
Some were unwilling to provide proof of funds. But I didn’t need to worry–they had a lot of money!
Some went through the process of signing the NDA, providing proof of funds, and having multiple conversations, only to end up ghosting me.
I think what a lot of this comes down to is that many people start looking for a business before they’ve figured out for themselves what it is they really want, and what they can actually execute on.
Here are a couple of the common misconceptions I encountered from buyers:
🚫 You can close on multiple acquisitions within a year.
Sure, it can be done. But I usually heard this from people who had never owned a business before, didn’t have the cash to back up their plans, and often were planning to maintain full time jobs.
My advice: Start with one business. Really learn how to be an operator. Yes, you can expand (and SBA has some great options for that), but the basis for a strong expansion is really understanding how the business works. And that takes time.
🚫 You can rely on seller financing to get deals done.
A good number of the folks who reached out needed 30% or more seller financing to close. While I was open to carrying a note, I wasn’t going to go that high.
Unfortunately, there’s been an unrealistic expectation set by the gurus that relying on seller financing is a viable strategy for buying a business. And while seller financing is a very common practice in business acquisition, the good deals are not being done with high levels of it.
Particularly with smaller deals, and especially with a business like a laundromat, there are cash buyers out there. If you find a seller willing to carry a large note, that business is likely going to need a significant time and money investment from you post-close.
Lesson 3️⃣ - It’s not that hard to be a good buyer. Here’s how.
✅ Do your research to learn what is realistic.
Spend time really considering what type of business is going to be the best fit for you based on your experience and how you want to spend your time once you are the owner. Also consider how you plan to finance your acquisition and what size business is feasible based on your current liquidity.
✅ Focus on making a good first impression and building rapport.
This starts with getting honest with yourself about what you’re looking for and how you plan to execute. Brokers and sellers need to be able to envision you as a good operator for the business, and they have to believe you can actually get the deal done.
Your initial outreach should not get into numbers. You should not start the conversation trying to secure a seller note or haggle for a lower purchase price. Simply start by introducing yourself and why you’re interested in the business.
Remember that for most owners, their business is very personal to them. They’ve likely invested a considerable amount of time and money into it. Keep this in mind as you interact with them. When you’re explaining your interest in the business, don’t just talk about the numbers. What about the business personally resonates with you?
✅ Demonstrate that you are a good person to work with.
Be responsive, transparent, and friendly.
When I was assessing buyers, I wasn’t just looking at how much cash they had. I was also looking at whether or not they were someone I wanted to work with. I knew that we were going to have a lot of back and forth, and that there would likely be a problem at some point that we would need to solve together.
I needed to have confidence that whoever I signed an LOI with wasn't going to back out at the last minute for a silly reason. I didn't want to be waiting days for them to get back to me about edits to the purchase agreement. I wanted to work with someone who was going to pick up the phone when I called.
From your first interaction with a broker/seller, show through your words and actions that you are honest and reliable.
Lesson 4️⃣ - Buyers and sellers become business partners.
I truly think one of the biggest oversights in due diligence is the seller themselves. The fact of the matter is, when you sell or buy a business, you are entering into a business partnership with the person on the other end of the transaction.
Yes, the partnership is limited (partial buyouts aside), but what you will be accomplishing during your time together is significant.
Due diligence can take months. More than likely, you’re going to encounter some kind of problem or unexpected circumstance at some point. And you want the person you’re doing business with (your buyer or seller) to be someone you can rely on to work with you, not against you.
This might seem like a silly word to use in the context of these very official business transactions, but I stand by it: You have to pay attention to vibe.
You know when you’re not getting a good feeling from someone. You can tell when someone seems a little shady–when it feels like they’re not quite giving you the whole story.
If I were considering a business to buy and everything looked fantastic on paper, but I wasn’t getting a good feeling from the seller, I’m not buying that business.
Because as someone who has sold a business, I know there are things I could have hidden from my buyer. Things they wouldn’t have realized until I had their money and there was no going back.
It goes both ways. You need to feel out your seller and determine if this is someone you want to partner with. You also have to show that you’re a good person to do business with, because they’ll be making the same assessment of you.
Lesson 5️⃣ - Business is about people.
It seems simple, but I see it so often overlooked, both by the people I work with who are seeking to buy businesses, and by a lot of the people who were interested in my business.
Too often, I see folks get too caught up in their spreadsheets. They’re so excited about the SDE or the margins or the multiple, they lose sight of the bigger picture.
Business is personal. It’s personal to the seller, who’s likely devoted a considerable amount of time and money to their operation. It’s personal to the employees, who are directly impacted by the work culture of the business and rely on it as a source of income. And it’s about to be very personal to you as the one who is going to be responsible for it, and maybe have a significant debt to pay back on it.
The vast majority of business owners selling their business genuinely want to see it continue to succeed, even if it has no monetary impact on them. They want someone who is going to treat their employees and their customers well. Someone who is going to continue the legacy that they built.
That’s exactly how I felt. And I saw firsthand how a seller’s personal view of a potential buyer could impact the deal. For example, there were certain buyers I was willing to offer seller financing to. These were people who showed a genuine interest in learning and growing the business. They asked good questions. They were transparent and responsive.
And there were other people I was definitely not open to offering seller financing to. These were people who seemed more interested in adding an investment to their portfolio than really operating a business. They would ask me a question and then interrupt me as I answered. They took a long time to respond to emails.
As you embark on or continue your business buying journey in the new year, I know you are going to see more opportunities come your way and experience more success if you can remember this lesson.
