The human mind is wired for survival. If you heard a crash or a falling of a tree, even if it was down the street, your eyes would open wide and your ears would perk up and you would be instantly and PASSIONATELY asking yourself “what happened?” Even though it doesn’t affect your life and it was not an immediate danger to you.
This fear or fight or flight reaction is very interesting to watch as a Broker who sells businesses. You get to see the fear in someone’s mind, for they must try to figure out how owning this business is dangerous. They must try to figure out what ISN’T RIGHT about the business, rather than seeing what is right about the business.
It’s interesting to see how opportunistic they are when they see the business at first, but only to take their first step into the FEARFUL MIND where they now switch from optimistic to doom and gloom. It goes something like this- they have a job they wish they didn’t have, and they are looking around for a perfect business for them to buy and they SEE IT! So, they contact me.
Now that they have signed the NDA after contacting me, now they are looking at the books, the profit and losses, and the details of the business. The “due diligence” or fear-based thinking is at play and in full display as fear-based questions come in like the ocean, wave after wave. What if this? What if that? What if the seller doesn’t ______? These things come up a lot and the irony is, it much like that tree that fell down the street from you earlier—its not real, its not in your life, its NOT a threat to you. Yet, the mind must make it so.
You see, the current owner is not “borrowing trouble” like the buyer is. The current seller isn’t plagued with all the “what if’s”, in fact that seller is the one who has worked at being optimistic and trying to look at HOW WONDERFUL the business could be for him. That is why the seller now has something to sell.
Opportunity is available for the seller and the buyer, but not if fear is leading the dance between them. 1 in 72 businesses that are underwriting by the SBA go bad or fail. Yet 100% of buyers entertain themselves with every what if scenario and worrisome thought they can muster up. It’s not conducive to a healthy acquisition, and it will almost always lead to an irritated seller and broker, putting the buyer in a light of which he may not want to be viewed in. Such as a pain, or a problem monger, or a worry wart.
Underwriting at the bank level assures buyer and seller that the business has passed the sniff test, and the buyer should rely on the process to get through the underwriting and focus on the growth of the business once he buys it. Not worrying about a threat that doesn’t even exist or affect him in any way.
A man who sees the cup half full will never go thirsty. The one who sees the glass half empty may not be so fortunate.