How to buy a successful small business with David Barnett and Henry Lopez. Henry and David share tips and advice on how to buy a profitable existing small business. David explains how to approach buying a business from the perspective and mindset of an investor. Henry and David also discuss building versus buying, how to find the right business for you, and some common mistakes people make when buying a small business.

Henry and David recently conducted a free webinar on how to buy a small business.

David is an entrepreneur, small business author, consultant, real estate investor, and mentor who is an expert in the areas of buying, selling, and financing small businesses.

After a successful sales career, he started his first business in 2005 and sold that business in 2006. He was also previously a business broker.

You can find out all about his current business ventures, and the services he offers his clients, at DavidCBarnett.com and InvestLocalBook.com.

He lives in New Brunswick, Canada.

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Transcript Excerpts from the episode:

David Barnett on the “Investor Mindset” required when buying an existing business:

“I think one of the things, though, that we should just talk about here briefly first is that the type of person who would start a business, I call them entrepreneurs, but the type of person who would buy a business, while they do need to have entrepreneurial aspects to them because they are going to be running a business, but I actually labeled them investors, because what they’re doing is they’re saying, I’m going to hand across the table a sum of money, and maybe it’s from my own bank account, or it’s borrowed, etc. And then what do I get in return and so you may have had a meeting with someone, a financial planner, bank, or someone talking about mutual funds or bonds or, you know, CDs or something. And that was the conversation you had, if I give this money over to you guys, what do I get in return. And that’s kind of the different mindset that a business buyer has versus someone who’s either ready to start their own thing.”

David Barnett on some of the benefits of buying existing small business versus building your own:

“There are two things you need to be successful in business, you need to have paying customers, and you need to have a product or service that they want and the systems in place to deliver it in a repeatable successful fashion. I often use the example of a dry cleaner. You can buy all that equipment, and you could lease a spot and you could set up a dry-cleaning place. But until you figure out how to give Mr. Jones back the same pair of trousers he brought in, you won’t be successful, right? That’s where the system comes into place. You can start a business from scratch and try to figure it all out on your own. You’d mentioned briefly there are franchises. And so this is what a franchise tries to bring to the table, is they bring you that system – here’s how you run the business in a successful way. But even a new franchise can’t deliver the customers. And this is what an existing business has, it’s already got the clientele in place. And there’s the product or service that they want and the systems worked out. And not only that, the team that’s there, those employees, well they come along with it, right. And so you don’t even have to train people on how to do this properly, the team’s already going to be functioning. So that’s the big reason why I like buying an existing business over starting one is because we already have that, you know, if it’s a good business, we’ve got that profitability already locked in on day one.”

The How of Business Podcast, hosted by Small Business Coach Henry Lopez, is focused on helping you start, run and grow your small business.