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Step
3 - Finding & Qualifying Buyers
Give
The Buyer A Tour Of Your Business
Eventually,
you will want your best prospects to visit your business in
person so they can tour the facilities.
A
good site visit can go a long way in creating enthusiasm in
the buyer and it can help to distinguish your business from
all the other businesses that the buyer is considering.
You
want to make sure that you do all the necessary preparation
to make the visit as productive as possible.
You
also want to make sure that you only conduct a tour of your
site for the very best prospects.
Too
many sellers make the mistake of hosting visits from buyers
at the very beginning - before the buyer has even read their
selling memorandum.
The
proper time for the buyer to visit your business in person
is after they have received your selling memorandum, had some
time to digest it and ask you some follow up questions.
Not
only will you save time and protect your confidentiality, but
the in-person meetings you do hold will be much more productive
because the buyer will be properly prepared when he arrives.
Preparation
In
the Preparation
Section we discussed all the things you can do
to spruce up the appearance of your location. If you haven't
done those things yet (such as discarding useless office
equipment, cleaning up the reception area etc.) do them now.
From
the time the buyer first hears about your business, they will
try to picture in their mind what it actually looks like. This
image is likely to be an idealized one - it will look
in their mind's eye exactly how the wish it to look.
Obviously,
you can't make everything about your facilities perfect, but
you don't want that moment when they first lay eyes on your
location to be a let down. So do everything you reasonably
can to make the physical location as attractive as possible.
Pride
of ownership is a big factor in the buyer's decision making
process. While you are undoubtedly proud of your business, it's
also possible that over the years you have let things slip a
little when it comes to organization and cleanliness.
If
so, admit it and take steps to improve things.
Scheduling
The Meeting
In most cases you
will want to meet with your prospect for the first time
after-hours or on the weekend. You want to be able to devote
your undivided attention to them. The fewer interruptions the
better.
However, it may be
to your advantage to have the prospect see the business
while it’s open - in the case of a busy restaurant or retail
store for example.
If this is the case
you can have the prospect come by just for a look. You can schedule
a more detailed sit-down meeting later.
If the buyer insists
on seeing the business while it is open (and he is a really
strong prospect) you may be forced to conduct the complete
tour during business hours. Just be sure he knows you are concerned
about confidentiality and that he should not speak with
any employees or customers about why he is there.
Make sure that when
you sit down with the prospect for the first in-depth meeting
that you will not be disturbed and that you have set aside
plenty of time.
Nothing is more destructive
than to have a meeting that is going well be cut short because
either of you has another appointment. Sometimes you can’t get
that level of enthusiasm back that you had been able
to achieve in a previous meeting.
Warm
up
When
you and your prospect first meet do not jump right into business
talk.
Spend
a few minutes getting to know each other. Attempt to build a
little rapport.
A few personal questions (but not too personal) such
as, Where are you from? Where did you go to school? Do you have
any kids? These are a good way to get people talking about themselves.
If
the prospect wants to go into some detail about his children
or his hobby – let him. It’s a good way for him to relax and
get comfortable in new surroundings.
Sometimes
the best topic of conversation early on is to talk about his
career and what type of work he is doing now. If he is perfectly
happy with were he is in his job and career, he wouldn't’
be sitting in your office. What does he dislike about his current
job/business? Why is he looking to make a change? What benefits
does he want his new business to provide?
These
questions can give you insight into what he wants – his hot
buttons. Try to tailor your presentation of your business to
his likes, dislikes, hopes and dreams. Try to show him, if it’s
true, how owning your business can fulfill those hopes and dreams.
(On a side note: it's a good idea to use words like "own"
and "owning" instead of "buy" and "buying" whenever possible)
Though
buying a business involves a lot of cold hard numbers it is
still a very emotional event to the buyer. This may be
something he has dreamed of doing his entire life. Think
back to the time you first went into business for yourself.
That mix of excitement and fear is the same thing your buyer
is feeling. If you can get the prospect emotionally involved
in the business, your job of selling will be much easier.
If
you are in a manufacturing or wholesaling business you may want
to set up a display of some of your most popular products
and demonstrate their use for the buyer.
During
this early "warm up" process you may want to share some information
about yourself. Talk a little bit about your family. Why did
you get in this business? If you’re retiring, what are looking
forward to doing the most once you have the time? People like
buying from people they like.
Studies
have shown that as little as 5 minutes of schmoozing/small talk
at the start, can have a dramatic effect on the success rate
of a sales presentation or negotiation.
If your prospect isn’t very talkative or seems uncomfortable
at the start of this warm-up process you obviously don’t want
to force the issue. Use your best judgment about how long this
warm up process should go.
Some
Key Points To Remember
1.)
Have a room set aside were you and the prospect can talk
in private. If your facility is so small that there isn't any
place you can have complete privacy, you may want to
consider moving to an off-site location once you have toured
the facilities.
2.)
In order to raise as few questions as possible with your employees,
try to minimize open discussions during the tour itself.
Instead preview for your guest just what you are going to show
him and then review it afterwards. It is in the private room,
or off-site location, where the buyer can ask more detailed
question about what you have shown him.
3.)
Try to customize each tour to suit the interests or hot
buttons of the individual buyer. If it is a manufacturing facility,
the buyer with the engineering background is going to be looking
for different things than the buyer with a sales & marketing
background. What's right up the engineers alley might be Greek
to the salesman. Don't try to make one tour fit all buyers.
4.)
Accept the fact that that you can't touch on every single
aspect of your business in one meeting. It's likely that
the minute the buyer leaves your premises you will remember
some positive feature or fact you wanted to share with
him.
You
can always follow up immediately after the meeting with a "Thank
You" e-mail to thank them for coming in and to see
if they have any new questions. And then you can drop in one
or two of those positive points you forgot about during the
meeting.
The
buyer is likely to be overwhelmed with new information
anyway. So resist the temptation to throw in the kitchen sink.
Is
Now A Good Time To Negotiate?
This
first face to face meeting with the buyer is certainly an appropriate
time begin to discuss/negotiate the details of an actual deal.
However,
while your are actually taking the prospect on a tour of your
facilities, you want to keep the discussion limited to the business
itself: products, manufacturing processes etc. The last thing
you want to deal with on the tour is questions like, "What
is the minimum down payment you will accept"?
Let
the buyer know you will be happy to discuss these issues in
private. But while on the tour, and immediately after,
make sure that discussions are focused solely on that.
When all his questions and concerns related to the tour have
been answered and you are in private, then you can move on to
discussing the terms of the deal.
In
most cases the buyer will not be prepared to get into
detailed negotiations with you at this point - they have
learned a lot of new information about your business that they
will want to review.
But
now would be a good time to discuss with the buyer a timeline
for when you would like to receive LOI from buyers, how much
time you believe is reasonable for the buyer to conduct Due
Diligence, and your target date for the closing.
Lastly,
you want to discuss what will happen next.
I
suggest you let the buyer know you will be calling in
2-3 days to see if he has any further questions. This gives
him some time to review and consider all that he has learned
while visiting the business. I would also send the "Thank
You" e-mail mentioned above immediately after the meeting
or that night and include one or two additional positive
features that weren't covered in the actual meeting.
Sell
Your Business Tips, Hints & Techniques:
Enter
your name & e-mail address below and each week I'll send
you detailed tips, facts, resources & ideas you can use
right away to help sell your business faster and for more money.
Next:
Signing
A Letter Of Intent
