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After considerable determination you’ve finally made the big decision to sell your business, now comes business negotiation. You have taken time to ensure the reasons for selling your business are valid, carefully considered and within the justifications of “good”. I am talking about the kind of reasons that won’t make a prospective buyer go running for the hills. With everything looking intact, you come up with a selling price, a little bit high maybe, but why not? – Your gut tells you it is the right price anyway!
With a price and enough a good reason it’s time to do some fishing “the buyer” but wait a minute, where are my manners, you have not done this kind of sale before, take some time and hone your negotiation skills with the following guide. Being a smart negotiator builds up to a successful sale of your business. Try and catch up!
Recruit a Force
Business brokers are professionals with expertise to just sell your business, nothing more. Engage a business broker, they understand the dynamics of a business sale and they definitely have had enough experience negotiating their way to a successful sale than you have. Business brokers got association tactics up their sleeve for marketing the business, possibly because they have a network, contacts and databases to get the word out. The second step, gather some useful business information for this process; Profit and loss statements, records of Tax returns, records of inventory, contract documents, lease documents and any other document of interest (loans, payrolls, external work relations…you name them). With these at hand, your forces are ready.
Understand your Market Structure
I know you already had a price tag but, it is vital that you have a realistic market value of your business. As important as impressive financial records and a good business standing are in the sale of a business, so does an intelligently planned selling price. Your business broker will help you with application of industry tested valuation techniques. This technique delivers a business valuation that is bound by market reality to meet equilibrium where balanced situations for all prospective buyers are considered.
“Good marketing makes the company look smart. Great marketing makes the customer feel smart.” – -Joe Chernov
With this, the valuation ensures your business is not underpriced or overpriced as dictated by the current marketplace. Remember, most buyers won’t play along for a price to be suitable, they just look elsewhere.
Know your Buyer
You don’t want to be involved in a wild goose chase with a buyer who will eventually walk away. Your business broker will help you find the right buyer for your business. Business brokers will focus on those prospects with genuine interest and more so financial qualification to close a deal. It is the work of the broker to know the bargaining power of a prospect buyers and early discovery of how the prospect will finance the purchase. By creating a bridge between the buyer and the seller, a business broker will develop insights that will help avert problems that might provoke a buyer to look away. More importantly, a business broker will keep the process moving smoothly during the negotiation process.
Keeping the Ball Rolling, Watch it
Just because an offer has not met the expectations of your asking price, do not automatically turn it off. Keep the ball rolling; study it closely and maybe and only then might you find a silver lining. A price you consider low might have other points to it to offset what you feel is a low figure. For instance, if the deal is to be seller financed, higher payments of interest and a consulting agreement might be more cash than you would have anticipated or maybe a promise of a buyer relationship that will make some cause easier. During the evaluation of an offer, take a longer approach and analyze a way on which the offer might just help you accomplish some objective for the greater good. Rejecting a buyer in terms of “punishing them” due to a low offer is just the worst one can do and certainly a self-defeating one if you’d take time for a closer look.
Project Confidence
Having alternative options is a good negotiating weapon but the mightiest of them is lack of desperation. From the word go, make it obvious that you have not been forced to sell and that if called for you would not do it at all. This can be achieved by ensuring that your business is in good operation order, you want the buyer to see it at its best. This is attained by conducting business as usual; normal operating hours, restocking, inventory management, repair and maintenance of elements critical to business success such as marketing materials should be emphasized and also having a good reason to sell such as retirement. Looking like you don’t have to sell your business, having made the decision to do it seems like cheating but, the buyer doesn’t know that! That’s the best business negotiation
The Art of When and How
Timing is crucial to almost every aspect around us and this applies to the successful sale of a business. A deal like anything else has a shelf-life and you don’t want it sitting around too long. Your business broker is the right tool to make the right decisions and keeping the process moving at proper pace. The broker will also prepare of offer advice about specialized contacts, documents and forms that are required for closing a deal without taking too much time pondering about it.
During the negotiation process, it is evident that a business broker will benefit you a great deal over. The business broker represents you and bridges a gap between you and the seller and with their expertise and association in this area completing a transaction takes a reasonable amount of time while enabling a successful close to create a win-win situation for everyone involved.
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