7. Buyer Qualification
Statistics show that only 10% of potential business buyers end up buying a business. In other terms 90% are tire kickers. As a result, qualifying buyers is key in selling a business. If the seller spends the same amount of time with every potential buyer inquiring about his/her business, he/she will be so overwhelmed by the number of repetitive questions and the huge amount of time spent and therefore will be discouraged from selling.
Moreover, many of the potential buyers might be current of future competitors learning about the industry. "The best way to learn about a new business you want to get in is to pretend you are a business buyer and meet business sellers in the same industry". For these reasons we strongly advise business sellers to seek professional advice from business brokers when selling their businesses. At Coldwell Banker Case Realty, we pay particular attention to screening buyers before presenting them to sellers.
8. Providing Information to the Buyers
Not all information about the business should be given to potential buyers. Confidential information should be kept until the buyer shows his/her commitment by making a reasonable offer and a deposit. Naturally you can not expect an offer from a buyer before giving reasonable information. But what is reasonable? It is difficult to answer this question because it depends on the business being sold. In general terms, any information that could be used by competitors should not be given in an early stage.
9. Business Showing
Showing the business to potential buyers after they have been qualified is a necessary step in selling a business. The showing is important since buyers need to picture themselves managing the business before making a decision about buying the business. Most sellers try to paint a perfect picture of the business. This in generally not a good idea for many reasons:
- Buyers expect the business not to be perfect, so the seller(s) lose credibility when trying to paint a perfect picture.
- If the buyer is mislead about the business he/she will finally discover the misfit during the due diligence period and will back off. The seller will end up wasting a lot of time and money on lawyer and accounting fees.
- Most buyers look for businesses they can improve and expect to make more money than the previous owner. If the business is already perfect, it is difficult to improve and it looses its attractiveness as a result.
We advise that sellers present the most accurate picture of their business by simply telling the truth, the good and the bad about the business. They will save a lot of time and money and will make the selling experience much more enjoyable.
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