What makes a "bad" business?

by a searcher from Illinois State University

1 year ago

I hear so many businesses never sell and that 90% of what gets listed is junk.

What makes a business bad? What kind of red flags are you looking for? 

I'm working on developing my "filter out" and pass criteria and would like to get others input.

2 likes
109 views
7 comments

searcher from Northwestern University - Kellogg School of Management

high customer concentration, owner dependency, lack of tailwinds, decreasing revenue, lack of revenue quality, employee dependency, very competitive market, limited talent pool

5 months ago | like reply | 0 likes

professional from Rice University

I think it is because many deals are first time transactions (for buyer or seller or both) and people trying to accomplish something outside of their competency is a challenge. Buying/Selling is a skill like operating any business is a skill. And skills are enhanced through experience and repetition. That is why it is so important for buyers and sellers to seek experience buy side/sell side consultants who can assist in navigating the waters.

Think of it in the following (exaggerated) example... what if this website was created for people that wanted to do self-operated hip replacements. The posts would "has anyone replaced their hip" or "hey I replaced my hip and it is swelling pretty bad, anyone have the same issue...Naturally that website doesn't exist because no one would perform their own hip replacement...when there are professional called "Doctors" available.

So replace hip replacement with buying/selling a business and replace doctor with consultant... and i think that 90% wasted deal number would be dramatically reduced. Have any interest to discuss buy side/sell side strategic consultation - just DM me, glad to chat.

1 year ago | like reply | 0 likes

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