Getting to your Seller’s Why = Better Deals

While Investing in buying small businesses the research and due diligence makes it too easy to get caught up in financial data and opportunity analysis. The basic transactional mechanics of the deal. The valuation and selling price, the financials, the funding, and the contracts. If we let it, it can become almost formulaic and transactional. For the seller, it can become impersonal. For us, it can mean leaving the best deal undiscovered.

I believe that the key to going from good to great is having a good rapport with sellers. Currently, a lot of small business owners are leaving the market. Many retired baby boomers, who were independent and started their own businesses, have no one to hand over their business to. They’re left with the option of selling or closing it. As a buyer, I’m searching for businesses that are making money, have been around for a while, and are not too risky. This creates a great chance for both of us to achieve the best result.

Every seller has motives for their small business. Money is one factor, but not always the most important one. As an investor, our capacity to consider more than just money allows us to discover improved outcomes for both parties. Many of these sellers have a personal story behind their business, with a lot of effort and determination to build it. While it is a business, it also holds a deep personal meaning.

Why did you start the business?
Why are you selling the business now?

As potential buyers, we should approach seller discovery with the empathy and respect it deserves. Taking the time to build rapport, to hear their story, to hear their whys with genuine curiosity is good for us and them. It allows us to negotiate from a place of trust vs. being an advisory.

I find that their story will have all the keys available to structuring a better deal. The seller will tell us exactly what that is if we let them, and we learn to listen. Through curiosity, we can become a partner in helping them get what they want most.

Are we able to resonate with their original mission, and expand it?
Are we able to continue the service they provide to the community?
Will their legacy live on and be in good hands?
Can we free up their time again?
Does a sense of security open up
Does it matter who takes over their legacy more than cash up front?

Not only do we get a better picture of what made their business successful, or a better understanding of why they are selling but we now have information to get creative with deal structure.

Maybe this concept is my why, to provide sellers with a trusted and understanding partner to pass their business onto.