Whether you’re wanting to buy a business or sell a small business, it’s essential that you get the best deal possible. Negotiating is the only way to ensure you are left feeling satisfied after a business purchase or sale.
So, here are our top tips when it comes to negotiating, for all business owners or potential buyers…
1. Understand the Details
Knowing the ins and outs of a business deal is key, you should know exactly what you’re entering into, or exiting out of. Without knowing the details, you could easily be blind-sighted or make mistakes that could’ve been easily avoided before.
If you’re buying a business, make sure to ask all of the questions that you want answering and more. Knowing why the current owner wants to exit, the financial situation of the business and the target audience will give you a better understanding of the business and if you truly want to buy it.
If you’re selling a business, ensuring that your potential new buyer is reliable and has the correct funding and ambition is crucial, so don’t be shy to ask personal questions and understating the details of the sale.
2. Have Set Pricing Guidelines
Price guidelines are vital to both buyer and seller, there’s little point in negotiating fine details when the pricing hasn’t been cleared up. Having set price guidelines and ensuring that you have valued your business correctly is important if you’re selling a business, and creating a budget which is affordable yet realistic is ideal if you’re a potential buyer.
Our guide on how to value your business is an excellent start, as it will give you a better idea of what to expect when you do put your business up for sale.
Knowing when to compromise is a vital part of the negotiation, not only when it comes to business sales, but also in everyday life. That’s not to say that you should be walking away without a deal that you’re happy with, but compromising on the details could make or break your sale.
Taking into account the price of the business, assets, turnover, a transition period for the new purchaser to settle and sharing target audience knowledge are all common topics for negotiation, which will accommodate both the buyer of the business and the seller.
The point of compromise is not to lose out, but to make the deal a win-win situation for all parties involved.
When buying or selling a business, research should be one of your advocates. Researching is key, as you’ll be able to understand the pricing of a business, if the valuation is correct, what it can take to run a business and many other important factors.
Researching businesses that are within a similar sector or industry is a great start as you can gather more information about the type of business you’re involved with. Search for what equipment is often needed, different staff, overheads and estimated valuations for businesses of a similar size to the one you own or are interested in.
Of course, all businesses differ and the costs will only be an estimate, however, getting a vague idea of what is to come is better than having no idea at all. Researching the buying/selling process and the need for a solicitor or financial advisor can also be beneficial to your deal and give you a better start to negotiating.
After you have researched, compromised and everything in between, it is finally time for you to secure a deal and agree on it. This may seem like the easiest ‘yes or no’ part, however, it can be difficult to please both parties and it’s important you walk away feeling satisfied.
Ensure that you have checked-over details, involved the correct legal parties such as solicitors or financial advisors, have negotiated a great deal and are ready to close it.
This is also a great time to ask for any transitional period from the current business owner and offer extra advice if you are the seller, to ensure all business is guaranteed to run smoothly.
That’s about it! You should be negotiation-ready and have all your research and compromising skills nailed, remember that it’s important to walk away with a deal you’re satisfied with.
If you’re looking to sell your business, why not use our FREE business valuation for any small business owner looking to find out the value of their business.
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