Let's examine the customer herself: her fears, concerns, and priorities. so as to be told a way to motivate someone to shop for your business you ought to spend a touch time thinking sort of a buyer.
Here are some important truths about buyers that you simply will want to stay in mind during the selling process.
Truth #1 - Money Isn't the #1 Reason People Want to Have Their Own Business
Many surveys of entrepreneurs have shown that cash is often 4th or 5th on their list of priorities.
The ability to regulate one's own destiny, freedom from a boss or corporate structure, and also the opportunity to be creative is always at the highest of the list of motives. Status, recognition, and therefore the ability to figure directly with employees and customers are equally or more important to a business buyer than simply making lots of cash. When presenting your business to prospects, show them how buying your company can provide them with these benefits.
Along these same lines, remember to inform the prospect of the fun of owning your business.
Will the new owner get to travel to exotic locations or meet exciting new people? Are there any perks like regular golf outings with clients? If owning your business has brought you lots of enjoyment and excitement, confirm the customer knows it. You never know what aspect of your business may be the thing that produces a buyer wanting your business over all the others that are purchasable.
Truth #2 - Business Buyers Hate Risk
While sellers focus mainly on trying to point out to the client how bright the longer term will be if everything goes right, the client is trying to find all the items which will fail. Some things a buyer will regard as increasing their risk include:
- financial statements that are sloppy, incomplete, or nonexistent
- sales and profits that are taking place without explanation
- a sales price supported a best-case-scenario future
- old machinery and vehicles which will likely have to get replaced or repaired within the immediate future
Qualified business buyers are observing - and comparing your company to - other businesses that are purchasable. The more you'll be able to do to limit risks just like the ones mentioned above, the higher you'll look compared to those other businesses.
Related: What Makes Your Business Sellable
Truth #3 - Buyers Don't Always Have a Selected Kind of Business in Mind Initially
Most small business buyers are first-timers. They will have decided they definitely want to possess their own business, but do not know yet what variety of business. Many first time buyers are career changers or retirees with tremendous abilities and skill. That they're currently exploring several industries should in no way cause you to doubt their seriousness.
However, the prospect should have already got done a big amount of research into your industry, and also they should be able to explain why he's inquisitive about your sort of business. If he hasn't, then he's using you to try and do his research and you'll be wasting it slow.
Truth #4 - Your Willingness to Assist Finance a Part of the Transaction Will Increase the Buyer's Willingness to Pay Your Price
When a seller is willing to finance a component of the sale, it goes an extended way toward building the business buyer's confidence within the business.
Down payment, rate, and length of financing are all variables that will affect the attractiveness of your damage. If you'll be able to be a bit flexible on all of those terms it'll make closing the deal at your required price lots easier.
Related: Seller Financing Agreement Template
Truth #5 - Your Willingness to Remain on for a Training Period Is Going to Be Viewed as an Enormously Positive
Even the promise of just 30 days of on-the-job training will go a protracted way in building your buyer's confidence within the deal. Especially if they're new to the industry.
How to Avoid Wasting Time with People Who Aren't Going to Buy
So you already know that the biggest reasons people want to buy a business are not money-related. They are psychological reasons like wanting to control one's own fate and to experience more freedom.
Related: 12 Reasons Why Owners Tend To Sell
And while it is absolutely necessary that we understand these psychological motivations we also have to be able to assess their seriousness and their ability to buy.
We have to be able and willing to pass judgment on people - and quickly. Otherwise, we will waste a lot of time. The reason is because of the 90% Rules.
The 90% Rule(s)
Here are some facts about business buyers that one study after another has shown to be true for a long time:
- 90% of people who inquire about buying a business never buy anything.
- Of the 10% that actually do buy a business, 90% of them are first time buyers. That means that most of them are uneducated about the buying process and what is actually required to buy and run a small business.
- 90% of buyers don't know what kind of business they want (or they are at least open-minded about considering several different kinds of businesses).
- 90% of buyers are looking to replace a job. They will not be passive investors. Instead, they will be showing up every day to run the business.
- 90% of buyers don't have enough money to pay cash for the business so their purchase will be financed. And 90% of those buyers get financing from the seller. So, about 81% of all sales are financed by the seller.
Since 9 out of 10 potential buyers never do anything, it means the 10% who do actually buy are part of a special minority.
To this special minority, the idea of owning a business is more important than the specific type of business.
More than how much money they can make, it is all those other benefits that you must sell to the buyer - the freedom, the pride of ownership, the ability to express themselves.
After all, if all they want is money they can stay in their present job.
It's the things that they can't get at a job that will motivate them to take that leap of faith necessary to go into business for themselves.
(And remember, 90% of buyers have never been in business for themselves before so you have to keep reminding them of the fun and satisfaction they will get from being their own boss. Just because you, as a business owner, know the benefits don't assume the buyer does).
The 90% who never buy anything either don't have any money or they have the money but they don't have the guts. While I would say more than half of the do-nothings don't have the money, a surprising number do have it. But they are scared off by the reality that owning your own business is hard work... and risky.
That's why you never want to whitewash how hard you work or the difficulties you deal with as part of running your business. The do-nothings will be turned off by it, but the real buyers won't care - they want and need the benefits of business ownership more than they want or need a cushy work schedule or a guaranteed paycheck.
If you try to paint a rosy picture of quick money for little effort, the buyer isn't going to believe you anyway.
If you work 60 hours a week, including most weekends, tell the buyer the truth. If that is what it takes to make your business work, the buyer needs to know that.
Otherwise, you will be selling your business to someone who will be unprepared to succeed. And if you are in that 81% of sellers who finance the sale, you will be lending your money to someone who is going to fail.
About the author: Emma R Holt is an experienced writer at EssayMap. She produces articles and short stories on different topics, including business. It helps her keep up with new tendencies of copywriting/editing/publishing. Besides, Emma is working on writing her book.