Early qualification of business buyers is powerful because people will tell you the truth at that point. Once they know they have genuine interest in the business for sale the answers to questions start getting hedged as part of the negotiation process.
Never forget –Real motivations of buyer prospects brought out through questions are powerful.
People believe that qualification is a big scary thing. It’s not. Its a series of friendly questions designed to get direct answers. Often the questions need to be asked in varying form several times. Be direct but always be friendly. Typically we do these over the phone – usually within a few minutes of the start of the call. For instance…..
Prospect: “Greg, I am calling you about the business you have for sale”
Me: “Great. Why do you have an interest in that business”
(General, safe question that helps me understand their big picture).
Prospect: “I have worked in the industry a long time”
Me: “What specifically would make this a great opportunity based on your experience?”
(Open ended question trying to understand big picture and indicate that I am listening by tying into last answer).
Prospect: “Buying the business for a good price and seeing opportunity to grow it”
(In a real conversation I would probably ask “what a good price might be” and then “what indicates an opportunity to grow”).
Me: “Have you looked seriously at other businesses – if so, why did you not buy them?”
(Again, probing for what is really being looked for – often buyer prospects don’t know this themselves).
Prospect: “I spent time on another business but he did not have clear financials or any managers that would stay”
Me: “You mentioned a good price – curiously (I love that word, very disarming) if you found the perfect business how much of your own money in your bank accounts do you have to invest?”
(You often have to ask this two or three times but 90%+ of the prospects will answer it at this point).
Often if the buyer prospect is clearly just beginning to look for a business I will ask if he and his spouse are willing to sign a personal guarantee with a bank putting their house at risk. Many people are surprised that this will be a requirement so it is good to clear that up early. When appropriate, I also will ask what income the buyer needs to make to support his family.
Now, lets look at what we have learned.
In about ten minutes we have learned that this prospect has motivations to own a business in an industry he knows. He has experience. We have some indications of things he will not buy (very important) based on the deals he did not do. We know the amount of money he has to work with. We have a good starting point understanding of this prospect and if he is likely to be interested and financially qualified for the business we have for sale.
So, in summation of how business brokers qualify:
- Questions are key
- Early questions are best because they tend to be answered honestly
- Real motivations brought out through questions are powerful
Harvest Business Advisors will qualify your business buyer prospects early and thoroughly. Then we can spend time on those buyers who have the ability and motivation to buy.
Clients choose Harvest Business Advisors for our accurate business valuations and our consistent ability to deliver the highest price in the smoothest sale transaction possible. Harvest provides business brokerage, business valuation, and business succession planning services. We have extensive experience in the information technology and professional services, manufacturing, distribution, and contracting fields. We maintain offices in Maryland, New Jersey and Virginia. Connect with us at email@example.com or 443.334.8000 to discuss selling your business, ordering a business valuation or buying a business.