After spending several days talking to dozens of people who claim to have an interest in a business for sale; after answering the same dumb question for the millionth time; after discovering that a great majority of these so-called buyers lack either the money (business purchase financing would be needed), the common sense, or enough business etiquette - maybe all three - to purchase the business in the first place, it is not surprising that many owner/sellers start to burn out on the selling process.
There is a danger, however, that "burn-out" and skepticism may cause a seller to insulate himself, or herself from this process to the extent that a real buyer can't make easy contact or even the ability to make a reasonable offer through an LOI or purchase agreement. Bottomline when selling a small business make it easy for potential buyers to contact you and be prepared for the selling process (in addition to a realistic asking/selling price upfront).
And that is a lost opportunity to make the sale.
Owner/sellers often are tempted to create "filters" to "weed out" unqualified, unmotivated, time-wasting buyer prospects.
And while it certainly is imperative that sellers carefully qualify all prospective buyers, there is a difference between "qualifying" and "turning off" buyers. The difference is, ultimately, the ability to sell the business.
A case in point concerns the seller of a Northern California fast food restaurant franchise for sale who had considerable difficulty getting any responses for a business offering - one that should have attracted several interested parties. A review of his advertising & marketing campaign on BizBen.com revealed many of the problems.
One was pricing (or should I say overpricing). Leaving some "room for negotiations" as many owner/sellers do, this owner set a asking price that was 15% to 20% higher than the bottom-line figure he was willing to receive. He reasoned that since many buyers will offer 10 to 20 percent below asking, the way to get his price, was with this over-price tactic. Additionally, he insisted on an all-cash transaction, and this may have eliminated a number of buyers who might otherwise have responded at the higher price if it was "packaged" with provable, reliable seller financing (or 3rd party financing - SBA, Non SBA, Bridge Financing, etc).
Noticing the lack of response, the seller upped the price by a significant amount. feeling he may have priced it too low to begin with (since other businesses in this franchise system, doing comparable volume, had recently sold for more than he asked). Perhaps, he reasoned, the low price was "sending a signal" that there is something wrong with the business - that the business is on the business-sales equivalent of the "discount rack."
Still no action.
His other key problem was rooted in a clever idea to minimize his time wasted with "buyers" who are unable or unwilling to move beyond the inquiry stage. When calling the response phone number the seller had posted with his business for sale ad/posting on BizBen, prospective buyers got a message encouraging them to go to a website he created, where they could register with information about themselves, learn more about the franchise requirements, and then--after going through that process - receive some information about his business for sale.
Understandably, with about 600 fast food franchises currently to check out on the BizBen.com website, most anyone inquiring about this particular business and getting that response, immediately crossed off this potential business as too complicated to pursue, and went on to the next offering.
This was getting nowhere.
The owner/seller requested, from me, some advice about how to get responses to his "for sale" ad/posting. Among the suggestions offered were: 1) Price the business at the minimum amount to which you will agree - and stand firm on the price, and 2) When the phone rings, answer it rather than letting it forward to a recorded message that explains the procedure necessary to learn about the company. 3) Upgrade his standard posting to the Fast Track program or ProSell Program for increased exposure to the right buyers. 4) Get his business pre-approved for business purchase financing for interested buyers - making certain that his business is financeable and getting lenders ready for potential buyers who want to act quickly.
Within days after making these and a few more changes, and becoming more available for inquiries, this owner/seller not only began getting a great deal of response, he also received an acceptable offer that he accepted. And he is fortunate that he took a back-up offer, as the first buyer was unable to meet franchisor requirements (take back-up offers - always).
With escrow scheduled to close in a few days on the second deal, this seller is beginning to move into other enterprises, a bit more knowledgeable about the importance of pricing a business correctly, making it easy for buyer prospects to get a hold of you, and seeking a broad audience of business buyers for your offering.
Yes, many potential business buyers you talk to will waste your time. But you need to expose your business to as many potential business buyers as possible, and then be ready to respond appropriately and quickly to each inquiry either via phone, email or text. At some point you'll receive the inquiry that will ultimately lead to a satisfactory sale.
Bottomline - advertise/market your business for sale correctly, expose your business to the right types of buyers, price your small business correctly at the beginning of the selling process (remember the first 30 to 45 days is the most critical), and for gosh sakes make it easy for buyers to reach you (offer your cell phone and text as contact numbers), and make sure you take back-up offers from buyers until you close your deal and get paid from the escrow process!
About the Author: Peter Siegel, MBA is the Founder & Lead Advisor at BizBen.com (established 1994 - 8,000+ California small businesses for sale & wanted to buy postings - with 500 new & refreshed posts daily). BizBen.com offers business buyers, owner sellers, business brokers and advisors free access to online postings, articles, blog posts, discussions, podcast, resource and broker directories, etc. Peter heads up the BizBen.com ProBuy, ProSell, & ProIntermediary Programs. Peter Siegel, MBA can be reached direct at 925-785-3118.
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