15 Tips on How to Negotiate While Buying a Business

Are you willing to widen your horizons? Have you ever thought about embarking in your own business? If you answered yes to both of these questions, th

  • 15 Tips on How to Negotiate While Buying a Business
    Manish Khanna' Image Manish Khanna

    15 Tips on How to Negotiate While Buying a Business

    • Sunday 18th of January 2015
    • Buying

    Are you willing to widen your horizons? Have you ever thought about embarking in your own business? If you answered yes to both of these questions, then you have already taken the first step to buying a business. Now you just need to complete the process of finding a business to buy and preparing yourself to negotiate. This is the hardest part for many people to complete.

    Deciding to buy a business is the first step to starting a new and exciting adventure. While buying a business can be easy, you need to make sure you are prepared. You need the skills to negotiate. This article will teach you the skills you need to succeed in buying a business and even make it easy for you.

    1. Both sides gain: Remember, most of the time someone is negotiating, both parties need to gain something. For example, when you are buying someone’s business you’re gaining the ownership of the business. The person you’re buying the business from is gaining your money and the chance for you to better their business. So make sure you are both winning with this offer.

    2. Offer: When making the offer, offer the lowest amount that will allow both of you to gain first, and then slowly climb up if needed. But one thing is for sure, DO NOT rush things! If the offer fulfills both of your needs then great, but don’t push it. The last thing you want is to scare the seller off.

    3. Homework: Find out how much the business is really worth so you can work on deciding a price. Also, find out what the business is and exactly what it does. When it is time to negotiate, it is important to know your facts about the business so you can offer the best options for their business. You want to be the desirable one.

    4. Evaluate: Is this the type of business you want? Will you be able to be devoted to this business? You do not want to buy something you won’t end up liking or keeping. You need to know for sure before you even start thinking of your price limit. To know more, check How to Value a Small Business.

    5. Decide: Decide what is the highest amount of money you are willing to pay is. You need to keep in mind that they are looking to make the highest amount they can. While, yes you want to spend the least amount possible, you need to remember the owner needs to make some kind of gain too. So make sure you adjust your budget accordingly.

    6. Advantages and Disadvantages: Write down what the advantages and disadvantages are of buying this business. Is it really worth the cost or the benefits of owning the business? Is there any risk of owning this business? See if the advantages outweigh the disadvantages. If they don’t, then find a new offer.

    7. Walk-away: You need to realize that some offers aren’t worth the money or risk. If this is the case, just walk away, other offers will come around. Before doing so though, make sure that is really what you want to do. Although other offers may come around, one exactly like this offer may never come back around.

    8. Offensive: Don’t feel like you’re going to offend the seller. For all you know, your price may be what they were also thinking . Just go for it, it will be worth it in the end.

    9. Listen: This goes for both parties. They both need to make sure they are letting the other party finish talking before agreeing or disagreeing. Let your body do the responding while they are talking. Nothing will ruin an offer more than being rude and interrupting the other party. Just keep patient.

    10. Extras: If you buy the business, you may be able to get something extra out of the seller. But don’t be pushy. They may even offer their selves. Never turn down extra offers too. They will only benefit your gain. You may be able to get advice from the seller or even some tips. This is also considered an extra for you. So make sure you take it!

    11. Questions: Remember to always ask questions about the offer. You need to know everything about the offer before you go all in for the offer. It may not be what you’re really looking for. Also, asking questions will make you more appealing to the seller because it shows you are really interested in their business.

    12. Winging it: Never wing a negotiation. You need to be prepared for all things that may be discussed in the offer. It’s just as important for you to be an appealing buyer as for them to be an appealing seller.

    13. Show off: Show off what you can do for this business. You may even change their mind on the price if they know exactly what your intentions are for their business. Showing off isn’t always bad, just prove to them that you are the perfect buyer.

    14. Don’t back down: If this is the perfect offer for you, don’t give up too easily. Don’t do this though by intimidating them. That will get you nowhere. You need them to trust you, just as you should trust them.

    15. Counter-arguments: Don’t be afraid to present a counter-argument to something they have said, but make sure you are calm about it. Wait until they are fully done talking, and then state your argument. Make sure while doing so you keep calm and logical. This will help you win them over for sure.

    If you follow these guidelines, you’ll be sure to win the seller over. Remember to stay calm and flexible throughout the whole procedure. You can accomplish anything you really go after. Now go out there and win the seller out there! You know you can!

  • Author Info Manish Khanna

    Manish is founder of Business2sell Group of Websites. 

    Business2Sell.com.au is one of the leading business and franchise for sale listing websites. We work with our business brokers, commercial agents, franchisors and private sellers to help them connect with the right buyers for their opportunities. 

    With website now functional in Australia, United States, United Kingdom, Canada, New Zealand and South Africa. We have over 18,000 businesses for sale listed, with over 220 Business Broker and Commercial Agent. 

    I have over 20 years of experience in Web Industry; I have been involved in websites industry since the early years of 1996-97. In my professional career I may have worked for over 10,000+ websites. My Specialty is to build portals or complex online applications.