Tuesday, 18 October 2011
Buyers come in many forms
Business sellers must not fall into the trap of focusing all their efforts on a single prospect or target market, no matter how attractive they may seem. There’s an important rule to remember when selling your business: One buyer is the same as no buyers. If the buyer knows he or she is the sole interested party, he or she is able to control the negotiations. Creating and managing competition helps maximize the price buyers will pay for a business.
Also, in today’s uncertain market, it’s more important than ever to separate the time-wasters (i.e. those who think they might like to buy but aren’t ready for it) from the serious buyers.
As with any kind of marketing, when selling a business we need to understand the varying target markets. There are numerous different types of buyers:
· Strategic Acquirer – Not to be confused with competitors, these are buyers who may be interested in the synergy’s that might be created by purchasing another company.
· Investors – Due to the volatility and poor performance of the stock market, many investors have realized that as a business owner, the return on their investments can be significantly greater when successfully operating their own company.
· Career Changers – Formally middle managers and executives who have taken early retirement packages are eyeing the advantages of being in business for themselves. For some, it isn’t just the money they’re dreaming of; it’s the desire for more control over their investments, their time and their lives.
· Employees – Employee Stock Ownership Plans can sometimes be beneficial to both parties, but they can easily backfire, especially if the deal falls through. That can create hard feelings. Another possible employee buyer is a present manager; however, he or she often doesn’t have much capital.
· Competitors, Suppliers and Customers – Although much maligned because of the risks associated with divulging proprietary information to them, this group when handled appropriately can represent an attractive prospect list.
Attracting buyers for a business is no easy task. Wide open promotions that a business is for sale can be disastrous, but the only way to find a buyer is to communicate that a business is for sale. A big reason sellers turn to a professional business broker when deciding to sell is to open up markets of potential buyers across the province, the country, as well as throughout North America. By allowing a skilled business broker to confidentially guide sellers through the sales transaction step by step, owners will be able to concentrate on their job – making their business as profitable as possible.
Do you have small business questions you would like answered about this article or others? Please visit www.VRWindsor.com or call 519-903-7807.
William Sivell is a sales representative of VR Windsor Inc., Business Brokerage; his blog appears every Tuesday.