A Sector That You Understand - Warren Buffett is famous for saying that he would not buy a business he doesn't understand. We agree and in fact, believe that if you are going to fill the X-Factor leader role you really need to have some kind of background in the sector you are buying into or be prepared for an extended mentoring process by the existing owner (maybe years). A Sector That You Like - This goes with the previous point, if you like a sector you are going to want to learn more about it, leading to understanding that sector well. Also, this ties into every point on why to buy a business…if you are inspired by a sector you are likely to be more creative, offer a better service to the community, work harder, be more committed, want to get people involved, etc…all of these generally lead to good financial results. A Company That Inspires You - Liking the sector is important, but to be truly successful you will probably need vision. To have vision you need to be inspired by the market you are surviving and whatever it is you are offering them. This inspiration is infectious and can turn the business into more than just a job for the employees with significant productivity and service level results. Geography Matters - You are going to need to spend time at the business, with the people and with the customers, at the very least. Although much of business can be done remotely, there is no substitute for meeting people and there are generally many people beyond just employees and customers that benefit from face time. Due to this, being close enough to attend the area where these people are is very important. The idea you can buy a business and be 200 miles away from most of the people and not cause a massive headache is unrealistic in most cases. A Business You Can Afford - As will be discussed in the chapters on valuation and deal structuring, there is a certain amount of your own capital that will be needed for costs and also a closing payment in most
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