The one thing, in one word, that you need to know when buying a business is PREPARATION. This eleven letter word is so valuable because it’s what separates a truly successful business buyer from everyone else. It’s preparation that gives business buyers the chance to jump on great opportunities when they show up. They sense a great thing when they come across it because they always follow clearly laid out preparation guidelines.

When purchasing a business, you should be prepared in every detail of the purchasing process. Your search for business opportunities is futile unless you know how to recognize a sound investment. And that takes preparation. In order to get prepared, it means knowing business operations inside and out.

Let’s think about the actual importance of careful preparation when purchasing a business. With it you’ll find out the crucial questions to ask a seller. You will know the critical areas of a business to investigate. You will understand the necessary issues to review and which business items to ask for from the seller. You will come to a fair price to offer. And you will always know exactly which particular clauses in the terms of a sales agreement to negotiate.

Educating yourself on the business buying process is relatively simple when you consider all the information that is available online and written in books. Preparing yourself for a business opportunity involves knowing the industry, identifying the competition, knowing the market’s future predictions and identifying avenues of financing.

Before buying a business, preparation is also necessary for conducting a business valuation, formulating questions to ask the seller, identifying the strengths, weaknesses, areas of growth and problem areas of the business, and negotiating the main areas in order to formulate a good deal.

Nothing frustrates a seller more than having to answer inquiries from buyers who are not prepared. When buying a business, prospective buyers are expected to have some business knowledge before entering into a contract with a seller. If you’re not prepared to commit to a purchase and sales agreement, it’s best not to waste the seller’s time.

Even though you may be a first-time buyer, it’s usually expected that you’re well-prepared to engage in the purchasing a business process. By gaining knowledge about all aspects of the business buying process, you will have the preparation needed to close the deal on the business opportunity you seek.

A common mistake made by those buying a business is to address things as they arise. But buying a business is a major investment and not one that should be left to a haphazard strategy. You can avoid common, yet costly, mistakes through preparation.

When purchasing a business, the secret to success is finding out everything you can about the business and its industry before engaging in any sort of contract. As you progress through the business buying process, learn all you can about the company’s financials and everyday business operations. Through solid preparation, you can rest assured that you are buying a business that is sound and positioned well for future growth.

One major mistake you can make when buying a business is to underestimate all that is involved in purchasing a business. Without proper preparation, you will quickly feel overwhelmed and without the knowledge to make key decisions or understand issues that you might encounter. The buying process is complex and includes many different stages, but with the proper knowledge and research, you can be well prepared to face them all with confidence.

When it comes to buying a business, the wise saying, “If you fail to prepare, then be prepared to fail,” so aptly applies. Preparation is the key to success when looking to buy a business that is sound and profitable. It is also preparation that will lead you in running and growing a success venture for many years to come.

Richard Parker is the author of the How to Buy a Good Business at a Great Price series. As President and founder of Diomo Corporation – The Business Buyer Resource Center, his materials, seminars and consulting have helped thousands of business buyers realize their dream of buying a business.