It's important to talk to a buyer about growth ideas when the seller has already done so and been unsuccessful. Discussing Growth Ideas With A Buyer Which The Seller Has Tried And Been Unsuccessful
It's important to talk to a buyer about growth ideas when the seller has already done so and been unsuccessful.

Over the past twenty plus years, I have worked with many business owners who were trying to sell their companies. Much of my work focuses on assisting owners in preparing their businesses for sale. This is a natural extension to my business since I have built a career helping people buy companies. I understand what it takes to sell one and most importantly, what a buyer must have in place in order for them to get through the entire process and close the deal.

A common inquiry sellers receive once their business is on the market is how a buyer can grow the company.

It is typical for a prospective buyer to think about all of the things the seller isn't doing which in their mind (the buyer's) are "so obvious".

What I have learned is that business owners who have remained energetic about their companies have likely tried most of what the buyers think they are going to initiate once they take over.

For a variety of reasons, these past seller plans did not materialize since they are no longer part of the business plan.

When buyers table these potential suggestions, quite often the sellers will try to prove how smart they are (not always the case) with a "we tried it – it didn't work" response. Not only does this answer discourage a buyer, it can derail a deal if a buyer starts to feel that there are limited growth opportunities.

Instead of this approach, it is far better to explain to the buyer that something like that was done but the results were not as expected and outline why. Explain to the buyer the entire initiative and where and why it did not produce the hoped for results. Perhaps it was just timing, market conditions or other issues beyond the seller's control. Maybe it failed simply because it wasn't a good idea. However, I have found that the many failed marketing/growth initiatives are a result of poor execution and a lack of sustained testing under a variety of scenarios.

Provide the buyer with some ideas on how, if you had to do it again, you would do it differently.

This may not apply to every scenario.

Some plans simply fail and they are not worth revisiting. But for others, it is important that a buyer gets the sense that they can, after learning the business, implement marketing programs that will lead to growth.

If not, a seller will be hard pressed to find a buyer who wants to purchase a stagnant company.

This article represents a fraction of what you’ll learn on this topic in the How To Buy A Good Business At A Great Price© series - the most widely used reference resource and strategy guide for buying a business. To learn more click here

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