What Is A Corporate Refugee?

Many potential buyers of businesses are referred to as corporate refugees. A corporate refugee is a skilled professional working in an often bureaucratic corporate career who faces burnout, layoffs, or dissatisfaction. In response, they gain a measure of control and destiny over their own lives by radically changing careers and purchasing a business. This career change requires taking an enormous amount of risk by leaving behind the security and weekly paychecks of the corporate world for the uncertain career path of an independent business owner. Statistics have shown that over 40% of today’ business buyers are corporate refugees. Most corporate refugees select established businesses or franchises with a steady stream of cash flow which allows them to keep a certain degree of control over their schedule and family life.

Assess Skill Sets and Background

The first consideration for a corporate refugee when potentially buying a business is assessing their own skill sets or unique abilities, knowledge, and experience that enables them to professionally perform specific tasks.
Then the corporate refugee should think about purchasing businesses within industries in which their skill sets may thrive.
For example, a corporate refugee with a customer service background and a passion for cooking should strongly consider purchasing a restaurant.
Other corporate refugees with strong leadership, interpersonal, and management skills may consider purchasing a service-oriented business (such as property management) where they may excel at supervising a large group of employees and managers.
Importantly, a corporate refugee should transfer their skill sets to an industry in which they are passionate and have some degree of familiarity for the best chances of success.
Without a background or familiarity of an industry, the owner’s capabilities to successfully operate the business may not be respected by staff, customers, and suppliers.
Corporate refugees should always thoroughly research the industry in which they are making an acquisition including the industry lingo, the competitive landscape, and what business models separate successful businesses from failing businesses within the industry.
Matching their skill sets and background with the right industry not only makes corporate refugee more successful business owners, but it will give them more credibility with business sellers when making an offer.

Set Realistic Price Range

Once potential industries are identified as a workable option, the corporate refugee must develop a realistic price range of the business they seek to acquire based on their available capital. Because of their typically high credit scores and income history, corporate refugees often attempt to finance the purchase of a business through SBA-financed bank lending. Putting up 20% or less of the purchase price affords them the ability to leverage their capital and purchase a better and more profitable business. Prior to starting a search for a business, however, a corporate refugee desiring to use SBA-financed lending should get prequalified by their bank. This way, they have a good idea as to their realistic lending capacity. Banks also require many borrowers to show proof of work history and experience within the industry in which the business being purchased operates, especially if special licenses are required.

Climb Learning Curve

When purchasing a business, corporate refugees must be cognizant of how their own learning curve will impact their ability to successfully operate the business. Every buyer of a business faces a learning curve insofar as how long it will take them to fully understand how to optimally run a business and replace the previous owner’s role. Most corporate refugees face a steeper learning curve than others since their professional life has most likely been spent in a hierarchal corporate culture where major decisions are left to others. Switching to an owner-oriented mindset often requires a mental switch where the corporate refugee trusts their own judgment, initiates changes, and is comfortable making top level decisions. The success of a corporate refugee’s business venture usually hinges on how quickly they switch to an owner-oriented mindset which dramatically increases their learning curve.

Transition Staff and Customers

The main concern for many corporate refuges when selecting the right business to buy is whether the company’s customers and staff will remain intact after the sale under their ownership. This is especially the case where the targeted acquisition has an active owner-operator with day to day responsibilities and personal relationships with customers and staff. While businesses are priced to reflect the level of dependency on the owner, corporate refugees should understand that the risk of losing customers and staff is real unless they are prepared to quickly assume the role of the owner after the sale. Prior to making an offer on a business with a high level of owner-dependency, corporate refugees should always ask for the seller’s transitional plan. A transitional plan describes the precise means in which the buyer and seller will work together after the sale in order to retain staff and customers. The sufficiency of the transitional plan should impact the corporate refugee’s decision to make an offer.

Corporate refugees that want career independence and the freedom of business ownership should always first assess their own background, skill sets, and financial means in order to identify the right business to purchase. Thoroughly researching the industry prior to making an offer is also crucial in order to establish credibility with the seller and in order to properly evaluate the business being sold. By having the right owner-oriented mindset, corporate refugees may quickly climb the learning curve and become successful entrepreneurs.

Give Martin at Five Star Business Brokers of Palm Beach County a call today at 561-827-1181 for a FREE evaluation of your business.