One of the biggest misconceptions about the sales process is that finding a buyer and dealing with all of the enquiries can waste a lot of time. While this is true if you do not know what you are doing, this part of the sale can be quite straightforward if you set things up properly.
As we covered in previous posts, if you advertise to the right people in the right way, your ads will self-qualify buyers, and you will then only need to deal with the most serious ones.
Most deals fall over between offer and settlement, where you can potentially lose the most time. If more private sellers were aware of this fact and took more action to thoroughly prepare their business for sale before listing, they would see significantly better results.
After selling hundreds of hospitality businesses we have worked out the most efficient way to ensure that the sale stands the best chance of progressing from offer to settlement. The good news is that this is not rocket science and is something that anybody can do.
The old sales phrase “people buy with emotion and justify with logic” is still true in business sales, but in most cases, there is very little emotion. If there is any emotion at all, it’s generally at the very start of the process, and it typically disappears quickly.
With this in mind, you need to be conscious that with a sale heavily weighted towards logic as opposed to emotion you need to be prepared to deal with questions and queries quickly and efficiently.
We have noticed that buyers go cold very quickly and become nervous if we do not keep up the momentum in the sales process. Sometimes, if there is a lag, they can start to have second thoughts, become suspicious, or switch to other options if you do not keep them engaged.
One of the easiest ways to keep the pace of the sale where it needs to be is to make sure that you have done all of your preparation and that you have the relevant information that buyers are likely to need ready to go.
At the appraisal (valuation) stage, we discussed the importance of ensuring you have gone through your updated financials in detail. Having done this, you can be confident in delivering concise responses when you get quizzed on the business’s numbers. This is a natural part of the early negotiations, and don’t be surprised (or offended) if buyers don’t believe what you put forward. There are many sellers, private and professional, who do not spend enough time working out accurate figures.
By spending time preparing and organising all of your documentation before you list your business, you will be much better placed to respond to enquiries quickly and efficiently.
Knowing the answers to common questions about the financials and the lease will help you respond quickly. This will help keep things moving and will also keep the sale progressing in the right direction. What you are trying to avoid are long gaps between the buyer asking for information and the answers being provided.
One key thing to consider about the sales process is that getting an offer is not the hard part. Taking the buyer from the offer through due diligence and landlord approval through to settlement is where most deals fall over and where a good broker earns their money.
We often talk about how the real work starts once you receive an offer, doing all you can to be prepared to move things along from this stage as quickly as possible will help you to improve the chances of your deal settling.
I hope that this post and the previous ones in this series have helped you understand the benefits of a well-executed business plan. While it may seem as if it’s taking longer to get the business to market, the time spent early on preparing things properly will pay dividends later on.
If you have any questions about the sale process, valuation methods, or exit planning in general, please feel free to contact us.
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