Most price objections are highly predictable when haggling over the selling price of your business with a buyer. First is their desire to set a low reference point and your desire to set a high one. In our last article, we discussed the classic flinch. Here are other tactics and tendencies you need to know about when seriously negotiating.
Turnaround the Price Objections
“I understand your feeling that $500,000 may be a lot. Some of our other prospects felt the same way. But when they seriously evaluated our financials, they found that the price was more than supported by our earnings and other attributes.”
This classic objection turn-around is based on the three words of feel (I understand thus shows empathy), others felt (showing an interest in negotiating) but they found (reinforcing your anchor).
Now what do I mean by other attributes? Buying a business is based on emotion even though we think we’re level-headed pragmatists. If the buyer is another printer, focus your discussion (and thus them) on potential savings through the elimination of duplications. If they’re not a printer, make sure they get a chance to sit in your chair so they can envision themselves commanding their empire from there. And if you have a funky office, spiff it up. It pays off.
It’s called presentation and it has everything to do with the focus: what you focus the buyer upon? Remember, you are selling your target price. And those who use concrete examples and picturesque language are more effective in doing so. So, do it.
The Details of the Price Objections
Some buyers want to prove to you that your target price is wrong, so they attack your price rationale. Don’t let them. It doesn’t matter how you came up with the price; that is your price (asking price). For that reason I would not share my valuation documentation, rather I’d supply them with all the original records (financial statements for instance) so they may come up with their offer.
Now the flip side of this may be a technique you wish to try. Investigate the reason for their price, “Why do you think it is only worth $300,000?” But remember it doesn’t matter how they came up with their offer. Your job is to get your price, not educate them.
If they won’t budge and it’s below your walk away price, then walk away. Don’t counter, but don’t burn bridges either. After all, you have your Worse Case Alternative to fall back upon.
Other Irrationalities
Overconfidence: “The business is worth $500,000 because that’s how much I need to retire.” If you are dealing with facts and a good valuation, you won’t have to question your price.
Under Confidence: “My price is too high because the buyer told me my price was too high – I have to sell it to them at that price because that’s the price they will pay and not one cent more and I don’t have any more buyers.” Selling a business takes time, often three years. It’s not like real estate. Two or three qualified buyers a year is often a lot.
Sometimes we want to sell so badly that we get into Finalization Frenzy. We want to sell and the buyer wants certain conditions – and, “By golly we’re going to do it because that’s what they need in order to do the deal. And we have to do the deal.” Here we forget to rely on our Worse Case Alternative.
And sometimes we forget there could be No Solution. Just because we enter into a negotiation to sell our business doesn’t mean we will come to a successful win-win conclusion. Sometimes, we can’t provide what the buyer wants. And sometimes, the buyer just can’t afford what we offer. Few people drive Rolls Royce’s. Scarcity is what makes them so valuable in the first place.
We will continue our discussion on negotiating in our next article.
= = = = =
Receive daily email training messages as well as have access to our short (8 to 10 minute) printing-specific training classes on product knowledge and selling through the new CPrint Academy. $495 for a year’s subscription covers everyone in your shop. Go to www.cprintalliance.com for more information. Message Tom at tom@cprint.com or reach him at (304) 541-3714, connect on Facebook and LinkedIn and follow his business tweets on Twitter @tomcrouser. Tom is Senior Contributing Editor of this magazine, chairman of CPrint® International and principal of Crouser & Associates, Inc., 235 Dutch Road, Charleston, WV 25302, www.cprint.com.
= = = = =
Comments are closed.