The most qualified, desirable buyers have the most options.

A buyer who is qualified to buy your business is qualified to buy lots of other similarly priced businesses too – you can be

sure that they will consider many other businesses beside yours.

And one option they always have available is the option to do nothing.

In fact that is what most prospects wind up doing – nothing.

9 out of every 10 people who respond to a business for sale ad or contact a broker never actually buy a business.

And that leads us to Action #2

Don’t wait for the buyer to follow up with you or initiate the next step in the process. Don’t assume they are only

focused on your business.

Whenever you speak with a prospect always let them know what they next step is in the process and try to set up a time

to take that next step.

Having one buyer is the same as having no buyers.

Even if you do everything right, your favorite prospect may choose to buy someone else’s business instead of yours.

You can never let your success depend on the decision of one person. They may behave irrationally or illogically. Or through no fault of your own, they may choose to buyer

someone else’s business.

So always be on the lookout for additional potential buyers. You never know which one will turn out to be your eventual buyer.

Owners often feel an obligation to tell their employees of their intention to sell.

You should resist that urge.  

It can take a long time to sell your business. Maybe 6 months to a year. That is a lot of time for things to go wrong.

Not only will your employees become distracted and possibly start searching for a new job, but news of your sale

could make suppliers less likely to extend terms and customers less likely to enter into new agreements.

And then there are all the ways your competition may use the news of your sale against you.

A buyer will only give you money for one reason – they want to enjoy the benefits of the future profits of the company.

And when it comes to smaller, owner-operated businesses the buyer will run the business much like the seller has. Therefore you must price the business based on proven

earnings (profits).

You should develop a price range not an exact price.

Then start the negotiations at the very top of that price range.

There is nothing magical about your business valuation calculations. There is no dollar figure that represents the true

value of your company. In fact, you shouldn’t even be interested in the theoretical value of your business. You want to find out what is the highest price a real human being will

pay for your business.

The business valuation process is just the beginning of the pricing process:

Your business is worth nothing separate from what a real buyer with real money will pay you. So get the businesses in

front of those buyers as soon as possible to see what the market thinks of your business.

The eventual price you get will be based on the best agreement you can strike from among the many(or few)

prospects you find.

You can’t sell the business through an ad – so don’t even try.

And don’t use patently absurd hype like “THIS BUSINESS IS A GOLD MINE!!!!”

You don’t believe that and neither will a prospect.

You have already stated your asking price in your advertising and marketing materials.

If a buyer asks you what you “really want for the business” and you quote a price lower than what you advertised, then

you are negotiating against yourself.

They buyer already knows what your asking price is.

If they want to make a counter-offer, let them.

Then ask them to justify it.

Sometimes owners fail to reach an agreement with a buyer because they really don’t want to sell. It is not unheard of for a seller to have a change of heart halfway through the

process. The decision to sell was made at a momentary low point. It was based on emotion.

If that is the case there is no shame in taking the business off the market. But you don’t want to be the kind a seller who

works hard with one buyer after another and then always sabotages the deal in the end because you are not ready to

part ways with your baby.

The other reason why it is important to know the answer to this question is that the buyer will always ask.

Justifiably or not, buyers are suspicious. They may never say anything, but they are wondering “if this business is so

successful why would anybody sell it?”

Of course there are many good reasons to sell a successful business: retirement, burn out, the chance to pursue other

opportunities or dreams.

The point is that this is an important question in the buyer’s mind. So have a well thought-out answer prepared.

I know you probably don’t want to. But if you want to sell sooner rather than later and put more money in your pocket

you really need to.

According to BizBuySell.com over 80% of small business sales include some form of seller-financing.

And according to Tom West at Business Broker Press, businesses that sale for all cash bring in an average of only

69% of the original asking price.

Realize that the negotiations should be more about terms than price.

Once you have decided to offer your buyer some financing the discussion will change.  

The buyer’s decision will come down to whether or not they can afford the monthly loan payments.

That is a good thing because it gets the focus off the price.

You can always lower the payment by extending the terms by 3 or 6 months. Or by lowering the interest rate half a point.

Meanwhile the price stays the same.

Your offer to stick around for a specified period of time for some on-the-job training will make your business much

more attractive to buyers.

Most buyers view training as being very valuable.

Just look at how much money people spend on franchises – in large part because of the training that comes with it.

Also, most small business buyers are first time owners so training is even more important to them.

And buyers are more likely to trust a seller who is willing to provide training after the sale – a seller with something to

hide will be out the door ASAP.

A reasonable buyer knows that risk is part of the equation when going into business. So they will always look at

businesses that are for sale with the idea of minimizing their risk.

Not eliminating it entirely, just minimizing it.

While you want to present your business in a best-case-scenario light the buyer will always have the worst-case-

scenario in the back of their minds.

If you have legal issues or contingent liabilities hanging over your head you may be better off taking your business off

the market while you work those things out.

Another signal of risk is when a business has just completed an unusually good year.

If you have been bumping along at the same profit levels for the last 5 or 6 years and then suddenly last year’s profits

jumped 50% …….. well, a buyer isn’t going to trust that sort of performance. They will assume it was due to some

temporary fix that can’t be duplicated.

Remember in Action #1 when we said the best prospects have the most options – and they always have the option to do nothing? If your business seems risky to the buyer then

“nothing” is exactly what they will do.

Sometimes a lawyer wants to “WIN”. If there is some legal issue with the deal then by all means, follow your lawyer’s

 advice. But you don’t want your lawyer trying to renegotiate the price and terms you’ve already worked out with the

buyer.

Let your lawyer know it is your business and this is the deal you want. And it is his job to help make it happen.

Your business is worth an amount equal to the best deal you can negotiate among the qualified buyers you have found -

nothing else matters.

Remember: Most small businesses never sell – for any price.

If a qualified buyer makes you an offer that is only 90% of what you were hoping for think long and hard before

walking away from it.

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