He May Want To Find A Job Having Experienced Forced Early Retirement.
Or there may be other good reasons that he needs to find a job so wants to buy a business that provides one. Another thing we can guess about him is that he considers himself to be unemployable in normal circumstances. He may be too old to start again in normal employment. He may have a background where demand is shrinking rather than expanding, and will be expected to continue to shrink. He probably has some capital, or some assets that can ordinarily serve as collateral for raising some capital. He may be a bit disillusioned with being an employee and the related uncertainty.
He wants to find a job where he can be his own boss. He thinks buying a business is the way to do that. He is highly motivated to start doing something again. He sounds good so far doesn't he. Well, let's take a closer look at him so you can begin to formulate ideas about how to deal with him.
One of the other ways we can consider him is someone under stress. His secure life as an employee of some other business, where he probably at least had a supervisory position was taken from him against his wishes. What, if anything does that tell you about what he is looking for, and how your should approach dealing with him?
If that's how you got into your own business, you will have many more insights than that about this buyer, and ideas on how to deal with him. In the absence of that kind of insight, could you safely assume that he is relatively unsophisticated. He may not have any experience in reading and analyzing financial statements. So relating business value and your asking price may be beyond his experience. Because of this he may be difficult and time consuming to deal with.
Many wanting to find a job in this way have experience that is quite narrow in its focus. It may have all been in one functional area, such as human relations, production, etc. Probably experience that doesn't help them understand much about running a business. Remember something made them redundant in their previous lives. Their questions may reflect their focus in their previous working lives. So it helps to know their specific backgrounds to prepare you for their focus.
They may also be very time consuming to deal with because their backgrounds are limited. The questions they ask will likely reveal the limitations imposed by their work backgrounds. You will probably have to be prepared to answer their questions. Then educate them as to the real significance of their questions, and the answers given. It may be that the questions will be irrelevant, and you will need to figure out how to respond without insulting them or scaring them off. With the following caveat.
Early in your discussions with them you should determine how they will finance the purchase of your business. Don't assume that they necessarily have the money. Remember that for several years people in North America have either saved little, or have been living beyond their incomes. This doesn't usually result in big cash reserves. People needing to find a job by buying a business are no more likely to have built up cash reserves than anyone else.
If they will need to borrow part of the purchase price, do they have backgrounds that will encourage a lender to lend them the money? And, something else for you to consider, and act on. Have you put together, and supported a good case for your business having the enterprise value to support the needed borrowing? Is it worth what you are asking, and can it reasonably be expected to service the needed debt, with a comfortable margin for error? It may be useful to determine how much debt your business can qualify for.
A buyer seeking to also find a job, with little background or sophistication, may have unrealistic expectations about his ability to borrow. He may not understand the requirements for borrowing the amount of money that he will need to buy your business. Don't find yourself in the same boat. Work from knowledge, and the expectation that he won't know.
By asking a few of the right questions, you will be able to know pretty early whether he should buy your business, and whether he has the capability of financing its purchase. If he doesn't have that capability, you will have to decide whether you want to try to help him.
And perhaps the best way to help him will be to suggest that he should look into a franchise, where he will be in a hybrid position. He will have capital at risk, and will supply his labor. But he will have an area franchise supervisor to hold his had. Reminding him in some ways of his boss in his old job.You will have helped him find a job.
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