Almost Everyone Looking To Buy A Business Was A For Sale By Owner Prospect At One Time.
What were we looking for when we were seeking a for sale by owner, and what were we thinking? Were we tired of dealing with real estate brokers who knew little about selling a business? Did we think that for sale by owner meant that the owner really wanted or needed to sell, and at least we would find someone motivated? To borrow a term from real estate. Try to remember that guided your thinking when you were doing this yourself.
Let's do a bit of educated guessing about what might be going on in the mind of a prospective buyer drawn to a for sale by owner. Could he be someone wanting to save time? He doesn't want to deal through an intermediary, particularly one without specific expertise in selling a business. He wants to deal with someone highly knowledgeable about the business, and someone capable of making a decision. If that is the motivation, where does that lead in terms of the way to deal with him?
What if something quite different is going through his mind? Perhaps he believes that by avoiding an intermediary, he will get a lower price because there will be no commission to pay. It is easy to see how someone could think that way. However, the amount saved on commission will really be insignificant compared to the purchase price. Can you put yourself in his shoes? Where does that lead you in terms of how to deal with him?
A for sale by owner situation is one where the seller is serious and has taken action. This is in contrast to some circumstances where an unsophisticated intermediary is involved. Real estate brokers frequently think they can sell businesses. The use their arsenal of real estate techniques to solicit listings. They may approach people that are not really serious about selling, but will sell if they get an offer they can't refuse. How can you use this possibility in your sales process?
Buyers can be attracted to an owner sale because of a wish to suggest a transaction that is somewhat out of the ordinary. They may make the assumption that an intermediary will be unenthusiastic about receiving and presenting this type of offer to a seller. First of all, the intermediary may lack the sophistication to understand the offer, much less present, and recommend it. The seller may feel much more confident in his own ability to explain and subsequently promote a transaction that is slightly complex, or unusual.
Buyers preferring for sale by owner opportunities may have had prior unpleasant experience in dealing with intermediaries. They may have encountered some that they felt were economical with the truth, to put it charitably. The truth or something approximating it eventually came out. But perhaps not before the buyers had wasted considerable time and effort based on distorted information. A similar outcome could have resulted from an intermediary just not having the sophistication to understand the verbal and written information that he had received. Either would discourage someone from wanting to deal with an intermediary.
The nature and sizes of the businesses that the buyer has seen through intermediaries my have discouraged him. Intermediaries may seem to represent a disproportionate number of convenience stores, and other small retailers. A prospective buyer after reviewing a number of these could have concluded that this was mostly all that was available through intermediaries, and decided to only deal direct. He may want something different.
There are other reasons for wanting to go direct. However, what has been discussed seems to point in a couple of directions. The first is that going direct can be quite effective. However there is one consideration. You may still attract people who are less than serious. This can waste lots of your time.
Another thing you can take from this if you decide to do something other than for sale by owner is to be highly selective in your choice of intermediary, and the role that you want him to play. If you have a sophisticated business, and expect to appeal to a fairly sophisticated buyer, you don't want an intermediary better suited to selling residential real estate in a small town. You want him to be able to understand the questions the buyer will ask, and the answers given. In fact, the intermediary should be able to foresee most of the reasonable questions, and get you to answer them in advance of dealing with any potential buyer.
A final word that may be a bit off topic. Remember that whatever method you use to sell your business, you are the seller. You have to remain in charge of the process. You have to prepare the information and put together or supervise the assembly of the marketing package. But who better. No one can know your business and its industry as well as you do.
For Sale By Owner
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