Qualifying the Buyer
Nearly every business that is for sale there will be a buyer who would love to buy the business but can’t afford it, they can see the value but don’t have the financial resources to actually purchase.
Unless the right questions are asked, a potential buyer can’t be qualified accurately.
Selling a business is usually a very long and bumpy process.
In the world of Business Brokerage Sales there are prospects and suspects. Prospects are real who want to genuinely purchase a business and have the funding already in place or the ability to obtain funding. On the other side of the coin there are the suspects who devour your time asking for more and more information without ever actually committing themselves to the purchase of a business.
The way to separate the suspects from the prospects is to qualify them. Before a potential client will buy a business, three conditions have to exist:
The first deciding factor is Money/Funding. Can the client actually afford or have the ability to raise the funding to purchase the business? One of the first questions I ask any potential Buyer is ‘what is your budget’? A very good friend of mine often tells me I should not ask this question and he tells me that it can offend and be intrusive to the potential buyer but to me this will give a good indication as to whether the client has the money or funding available. When purchasing a business this is a question that one should expect to ask or be asked. It is no good offering a business that is listed for sale at THB 10 million when the client is unable to afford it. I believe in getting all the money issues on the table early in any discussions.
The second deciding factor is desire and establishing a need to purchase. The person must want to buy a business and is not being coerced into doing so by a third party. With most buyers there is a reason usually a means to be able to afford to stay in Pattaya or for investment purposes which offer a better return than they can achieve elsewhere. ‘Why does a buyer want to buy a business’? It is the most straightforward question that I can ask and will most likely follow the question that the buyer wants to know why the seller wants to sell their business? It usually gives me a good idea in what the potential buyer is thinking in terms of interest.
The third is Authority. Sometimes the person making the initial enquiry is merely a friend of a potential buyer or a competitor (which has happened on a recent enquiry for a business) or another Broker. It maybe that they are a gatekeeper tasked to gather information. They sometimes ask all the right questions or provide the answers I want to hear but are not the genuine Buyer. One needs to talk directly to the actual decision maker or makers if there is more than one person involved, that way clients can’t use the excuse that they have to run it by someone else.
The cost of not qualifying prospects can be very high: The time and energy (and sometimes financial resources) devoted to selling to an unqualified potential buyer is wasted. Somewhere out there is a real customer for every business that is for sale that you didn’t have time to sell to because you were busy with a dead – end suspect. Suspects are unfortunately part and parcel of the selling process in any business and weeding them out can be extremely time consuming and frustrating.
For further information on purchasing a business in Pattaya please call Sven 087 283 5349 or email me on [email protected] or visit our website www.businessbrokersasia.com