One of the most important steps in selling a business is the first meeting between a prospective business buyer and the business owner / seller.
This first meeting between a business owner and the prospective buyer will seemingly revolve around many mundane questions and answers on finance, how does the business run, and other everyday matters. These questions will be asked primarily by the buyer. But, this is not where the true focus of astute business sellers should be !
The Seller should ask questions to get to the prospective buyers real underlying motivation. Motivation is something bigger and more specific than “I want to buy a business”. Usually you need to poke around with at least 5 or more questions to get to details and underlying driving emotion. Emotion is huge. Don’t worry about the business deal yet.
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A fact of sales is no matter how rational we want to be – most major decisions are driven by deep emotion and the ancient reptile part of our brain. If you can begin to understand what is driving and exciting that basic instinct part of the brain in a prospect you will be able to negotiate a better deal. Often the buyer does not even understand these deeper emotions – at least in a way to verbalize them.
Start with easy questions to get a conversation going. What other businesses have they looked at? Why did they not buy them? Why did they call on this business? What do they want to accomplish by owning a business? Again, you must almost repeat the same question in many cases several times to get to the real heart of the answer. We are conditioned to not answer questions directly. You want a direct answer. Typical conversation might be:
Seller: “Why did you call about my business?”
Prospect: “The business looked like it has growth potential.”
Seller: “What do you mean by growth potential?”
Prospect: “My dad owns Rogers Builders and has been very successful. I want to grow a business too.”
Seller: “Can you tell me a little about your dad and Rogers Builders?”
Prospect: “He started 25 years ago with one small project and now has $100 million in revenues.”
Seller: “What might you hope to accomplish here?”
Prospect: “You have a nice base of repeating clients and several key people in place. A nice platform that could save me several years time starting from scratch.”
Now we have learned quite a bit. This is a person who is highly competitive, trying to make a mark in the world, who values growth. You will emphasize very different aspects of your business than if he was looking for a steady secure income.
Later in meeting show how he can accomplish his motivation. Big picture – not details. Ask him if it accomplishes it. Ask him why and how he would know if he accomplishes the goal. This is another essential key. If you tell him he can accomplish his goal buying your business it might mean something. If he says he can accomplish his goals buying your business the statement sticks.
Seller: “So tell me, how might you change things if you bought the business to meet your goals?”
Prospect: “I hope to rely on your general manager more to resolve day to day problems so I can devote time to selling and finding one or two key people that will allow me to really propel growth.”
When people start seeing themselves in a business and making changes you have achieved the first step of sales which is creating a strong desire – a driving emotion. Pay attention to this. Whenever negotiations get tough, come back to what they are really trying to accomplish. It will keep conversations going. For example:
Seller: “I know you are concerned about paying 10% more than you were hoping to – but the business should still be able to grow rapidly. What do you think?”
While usually the prospect will say no – the seed is there. The negotiations will continue. Emotions drive us. Facts and figures justify later.
Create the sticky emotional desire in the buyer prospect at your first meeting. Create good rapport and trust. Worry about the deal next time.
Clients choose Harvest Business Advisors for our accurate business valuations and our consistent ability to deliver a high price as part of a smooth exit transaction.
Harvest Business Advisors provides business brokerage, business valuation, and business succession planning services. 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.