Old mate Warren Buffett once said,
“Rule number one: don’t lose money. Rule number two: don’t forget rule number one.”
It’s cute until you realise it applies to your first business deal.
The one you’re about to stuff up because it feels right.
Let me be clear:
Your feelings don’t count.
Due diligence does.
FALLING IN LOVE WILL KILL YOUR DEAL JUDGMENT
Everyone has a crush on their first deal. It’s normal.
But if you’re already picturing yourself behind the counter with your name on the coffee loyalty card, pull back.
That’s how people get emotionally wrecked and financially rinsed.
One rule from my old man:
“Never fall in love with something that can’t love you back.”
HERE’S WHAT SHOULD MAKE YOU WALK. FAST.
1. It’s Losing Money
If it’s bleeding cash and the seller says, “You just need fresh energy,” that’s code for “Please take my flaming dumpster.”
You’re not a turnaround CEO. You’re a first-time buyer with a mortgage and a bad back. Leave it.
2. You Need a Loan the Size of a Small War Chest
Stacking debt on a shaky business is how people end up Googling “Can I return a business?” at 2am.
3. Margins So Thin You Could Shave With Them
Ten percent gross margin is a rounding error, not a business model.
If it costs $90 to make $100, one supplier price hike and you're selling furniture.
4. Heavy Assets, Light Logic
If the place needs forklifts, cranes or a diesel mechanic named Kev, think twice.
You're not buying a fleet. You're buying headaches with a depreciation schedule.
5. Seller Who Thinks They’re God’s Gift
Avoid the 35-year-old founder with a TEDx talk and a SaaS idea who wants 12 times revenue for their dog wash.
You want the retiring bloke who just wants to go fishing. That’s your seller.
6. No Cashflow for Leverage
Thinking about borrowing against future cashflow? Make sure there actually is some.
If the business barely covers lunch, banks will ghost you faster than a dodgy Tinder date.
7. Can't Even Pay Yourself a Wage
If the business only works when the owner works 80 hours and pays themselves nothing, you’re not buying a business.
You’re inheriting burnout.
8. No Buffer
Ask how much cash is in the business.
If the answer is “We manage week to week,” run.
You need something that survives a rainy quarter without panic-baking lamingtons.
9. You're the Only Operator
If you leave for a week and the business dies, congrats.
You've bought yourself a prison with a brand name.
Make sure you can hire help and still make money.
10. Seller is All Vibes, No Docs
If they say “Don’t worry, it’s all good, we just haven’t put it in writing,” leave.
Immediately.
Good businesses have documentation. Bad ones have excuses.
11. Sales Dropping Like a Wet Pavlova
“Ignore the last two years, we had some one-off stuff.”
Translation: the decline is real, and you’re next.
Run the numbers for a worst-case year.
If you can’t survive it, don’t buy it.
12. No Way to Grow
Can’t add new customers? Can’t raise prices? Can’t upsell a single bloody thing?
That’s not a business. That’s a fixed-income job with more risk than reward.
13. Fancy Accounting Terms
If the seller starts banging on about EBITDA like it’s magic, ask them what the net profit is after paying for all the real bills.
That’s the number that matters. Everything else is just seasoning.
14. “We’ve Got a Patent Pending”
Sure, and I’ve got a helicopter on layby.
If you don’t understand the patent or the product, stay out of niche technical land.
Your first business should not come with legal risk and napkin sketches.
15. Seller Gives You the Ick
Trust your gut. If they’re slippery, aggressive or weirdly defensive, that’s not charisma. That’s a red flag with aftershave.
Don’t buy from someone you wouldn’t have a beer with.
16. No Exit Plan
What happens if you want out in 12 months? Can you resell it?
If the answer is “Uhh…”
you’re buying a one-way ticket to regret.
17. Partnerships Without Clarity
Partnerships sound lovely until someone wants to take Christmas off and the other wants to open on Sundays.
You need agreements. Not handshakes. Handshakes leak money.
18. “We Just Need to Close Fast”
If they’re rushing you, it’s not urgency. It’s desperation.
There’s always a reason someone’s bolting for the exit. And it’s rarely good.
19. You’re Already Defending the Deal
If you’re saying things like, “I mean, it’s not that bad,” then mate, it probably is.
This is how you justify buying garbage with optimism and a spreadsheet.
LEAVING A BAD DEAL ISN'T FAILURE. IT'S STRATEGY.
You don't lose money when you walk away.
You lose it when you ignore the signs, double down on hope, and tell yourself it'll all work out.
The smartest dealmakers aren't the ones who say yes the fastest.
They're the ones who say no often, early and with complete confidence.
So when the deal stinks, don’t hesitate.
Walk fast. Walk proud. Walk like you dodged a bullet.
Because you probably just did.
Your Next Step
Ready to find businesses that checks all you boxes?
Explore our current listings of Australian businesses for sale at BusinessForSale.com.au