Begin With The End In Mind
I haven’t started any of my blogs with the exclusive idea of selling them, but I certainly keep the thought in mind, and I’d sell any or all in a heartbeat, for the right price. Scott, over at wrevenue.com (who has a couple million times more experience as I do) has an excellent article on how to sell for profit. If you’re going to do anything with a profit potential I advise you read it and start each venture as it was going to be for sale.
Negotiation truly is an art, and there isn’t enough space in this post to do it justice. Some negotiation tips include:
- Never give the buyer an “asking price” number or even a range. Let them throw out the first offer. Giving a range puts a cap on the maximum possible sale amount from the get go.
- Never accept the buyer’s initial offer. Assume that it’s a low ball offer. A savvy buyer assumes that you’re going to negotiate a higher price and therefore they will start low. They figure that if you do negotiate with them, then they won’t end up overpaying by making a low initial offer and if you don’t negotiate, then they will snag your business for a steal. This assumes you have the stomach to negotiate of course. If the buyer is offering a sweet deal and you are happy with it, consider taking it. “Splitting the baby” is generally a good practice: if they offer you $10,000 but you really want $20,000, don’t come back to them with $20,000 because they’ll offer you $15,000 at the most. Come back to them with $30,000 and they’ll be more likely to come back to you with $20,000.
- Don’t seem overeager to sell. Convey that you’re happy running your business and will be content to continue doing so.
- Be creative with the deal structure. If the buyer proposed a one-time cash payment, come back to them with a higher proposed cash payment and tack on some deferred payments. If you’re feeling brave, suggest an earn out.
- Emphasize your unique value proposition, or the thing that your company does uniquely and really well. This is the thing that makes the buyer really want to buy your business and they shouldn’t forget about it.
There’s a lot off top. insider information in the whole of Scott’s article, but the pull quote above sums up a lot about the many mistakes I’ve seen people make in selling both on and off-line properties. As a former contract negotiator and a “wanna-be” rancher who’s bought an sold many a heifer or bale of hay, I want to leave you with my strong reinforcement of Scott’s first point. If you remember no other rule, remember this … he who names a price first always loses. Sell well.
As always, I welcome comments, constructive criticisms, disagreements, questions or just plain talk. You can leave a comment to this article or email me direct at: davestarr (at) gmail (dot) com or call me on 1-719-423-8872. I’m usually on Yahoo messenger (davestarr) and will be happy to chat there. If you liked this article, please subscribe to my RSS feed so you get all my news and views.