If you’ve been thinking about to purchase a business for a while. You’ve thought through the pros and cons of buying versus starting from scratch (or expanding). You’ve even found a promising candidate that’s for sale—but you’re still not sure how to get the ball rolling.
In this post, we’ll cover some tips for successfully negotiating a deal with your seller so that it meets both parties’ expectations.
Understand the seller’s motivation.
The first step in negotiating a deal is understanding the seller’s motivation. If you don’t know why they want to sell their business, it will be difficult for you to negotiate a good price. You can ask them directly or get information from their accountant (if there is one).
You can also ask for a copy of the business plan so that you have an idea of their goals and objectives when starting the business, as well as any possible challenges they may have faced along the way.
You should also consider the seller’s reason for wanting to sell. If they are retiring, you will be able to negotiate a lower price because they won’t be as motivated as someone who needs cash immediately and doesn’t have other options.
Get a feel for the seller’s business.
When you’re trying to negotiate a deal, it’s important to get a feel for both sides’ motivations. Why is the seller selling? What kind of expectations does he or she have? What are his financials like, and what are his plans for the future (if any)?
If you don’t know these things, then it’s going to be hard for anyone else involved in the negotiation process–including yourself–to get an accurate picture of what’s happening here.
Present an offer that matches the seller’s expectations.
The most important thing to consider when offering a price is the seller’s expectations. If you offer too much, it may be difficult for them to say no; if your offer is too low, the seller might think that you’re not serious about buying their business and walk away from negotiations altogether.
To help ensure that both parties are happy with the deal being negotiated and move forward with confidence, follow these guidelines:
- Understand what the seller needs out of their sale. This means asking questions like “How long have they owned this business?” or “What were their goals in starting up?” You’ll get some insight into what factors influenced their decisions in starting or growing their small business and how they feel about selling now (or whether they’d prefer another option). This information can help guide your pricing strategy going forward – if they’re ready for retirement after decades of hard work then perhaps paying top dollar isn’t worth it, but if there’s still plenty left on everyone’s bucket list then maybe now would be a great time!
- Offer fair prices but don’t be afraid to negotiate! Remember: both parties want what’s best for themselves so don’t feel bad about trying something different than expected during negotiations – especially if it means saving yourself money down the road! Just make sure whatever offer made doesn’t exceed what realistically could happen given current market conditions; otherwise, there won’t really be any point wasting time negotiating over something unrealistic anyway…right?
Conclusion
If you’re ready to start the process to purchase a business then there are experts who have decades of experience working with buyers and sellers alike, so they know what it takes to get a deal done.