Advice from Benjamin Graham appropriate for buying a small business

Benjamin Graham, one of the strongest influences on Warren Buffett’s investment philosophy, was big on self-reliance and not making decisions based on what others think (whether that be Mr. Market, or other advisors). Here’s a quote I think is particularly appropriate for buyers of small businesses from Benjamin Graham:

“Have the courage of your knowledge and experience. If you have formed a conclusion from the facts and if you know your judgment is sound, act on it – even though others may hesitate or differ. You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right.”
– Benjamin Graham

One of the mistakes I see small business buyers make is in trying to rely on advisors to tell them whether or not they should buy a business. The problem with this is that the reason that many attorneys, CPAs, management consultants, and money managers do what they do rather than buy and run businesses is that they are not comfortable with general entrepreneurial risk. Consequently, they frequently are not the best people to ask “should I do this or not?” Rather, a better use for these professionals is to have them help you to understand a prospective acquisition better and its risk factors, then armed with that information YOU can make a decision about whether the acquisition makes sense or not for your situation, objectives, and risk tolerance.