5,4,3,2,1, Ready or Not Here They Come
Small business owners run and hide, and business brokers seek. It’s a never-ending game that for the broker can be an ego destroying, energy draining effort in futility. And the way small business owners play the game, they often unwittingly destroy their financial future. What if you could change how you play the game and dramatically increase your ability to sell your business?
I was a brand-new business broker excited to help other owners sell their business. I’d sold my business 12 months earlier and it changed my life. I believed in my background. My experience and my motives were strong – and I wanted other owners to find the same miracle I found. The problem was I had no listings and no prospects.
The old timers in the brokerage I joined could count on their phones ringing occasionally. In-bound calls from former clients and referrals offered them opportunities I wouldn’t have for years (if I lasted that long, which I didn’t). The firm’s marketing helped, but the other brokers’ appetite for prospects far outpaced the number of inbound leads – and I was the rookie, so there was very little on my plate. What was I supposed to do? I was supposed to hustle.
- Where can I go and find business owners to talk to?
- Who can I call?
- How can I have a conversation?
Feed the Funnel
100 cold calls should give you 10 conversations. 10 conversation should give you 2 meetings. 6 meetings should get you 1 listing.
That’s part of the training I received as a new broker. Feed the funnel. My focus was smaller “main street” businesses. One of the techniques I used to feed the funnel was to drop a card at a business in a handwritten envelope that read “confidential for business owner”. The note inside simply said I would like to have a confidential conversation with them about the potential sale of their business. Most notes went unanswered, but if the timing was right, a response could be energetic.
You Must Have Been Sent by God
That was how one business owner started her conversation with me. “I was praying last night for some guidance on what to do with the business and this morning I found your note under my door. Can you talk right now?” Why do business brokers constantly pursue a conversation with you? Because they know that most business owners ignore them (and this topic) until it suddenly becomes all-consuming. I could have called that owner 100 times and been ignored each time because she wasn’t “ready to sell”. This morning I was heaven sent. Regrettably for most business owners, “I want to sell the business” comes like a lightning strike. Yesterday a broker is noise, today a sign from above.
The broker wants to be in front of you when you switch from “run the business” to “sell the business.” And given how arbitrary that moment is for most owners, the broker knows it’s all about hustle, repetition and luck.
The Broker’s Secret
But even with all that hustle, brokers have a secret. Brokers know your business probably can’t be sold. The odds, industry norms and hard experience have taught them that most businesses are not ready for sale. Even the brokers that say “I can sell any business” know that. Can your business be sold? Even the most experienced broker has no way of knowing that until you let them in. Unless you share some information, until you have a conversation, your business is a mystery. It’s impossible to tell from the outside whether a small business is sell-able.
- It looks busy – but the expenses are way too high.
- The retail store is always empty – but they ship online orders out the back 24 hours a day.
- It’s growing like crazy – but all the growth is financed with debt.
- It’s been around for 20 years – and the owner’s lived in poverty that entire time.
As a business broker I dealt with this reality every day. The only way I could find out if a business was sell-able was to have a conversation with the owner. And in most cases, the only way I could have a conversation with an owner was to find one who was “ready to sell”. So, I had to keep calling.
I know there are brokers who can afford to sit on their hands, invest in marketing and advertising, and wait for the phone to ring. That wasn’t me; that’s not most brokers, and the brokers who sit and wait aren’t the brokers looking to serve small businesses (which make up most of the market).
Hate the broker hustle? Fine, but understand if they want to eat (most broker’s work on commission), they need to chase.
Business Owners Run and Hide
Small business owners may be the busiest people on the face of the earth. Always more to do. Always behind. Never enough time, but that doesn’t keep the brokers from calling. They stop by your business unannounced. They leave cards, letters, messages. They Tweet, post, email and IM. The business brokers WANT to talk to you – and you avoid them. It makes sense. After all, you’re not ready to sell, so why would you waste your time?
They chase, and you run away and hide. That’s the game. But each time you play the game, a false belief in your head evolves a little more, and it leads you down a very dangerous path (at least it did for me).
My Business Can be Sold!
This perspective will kill an owner’s already limited chance to sell their business. Most small businesses are not sellable. If an owner wants to sell, it’s likely the business will require substantial change before it’s ready. Often those changes can take years to make, and given how owners play the game right now, they won’t even learn about those changes until they reach the “ready to sell” stage.
Again, the current game runs like this:
- Brokers chase owners.
- Owners run away and hide because they aren’t “ready to sell”.
- Owners assume if they are being chased, they must be worth chasing.
- Then, one day, the owner is “ready to sell”.
- They talk to a broker.
- They realize they are years away from having a sell-able business.
- They never sell their business.
This is probably your future unless you change your approach, but the brokers keep calling, and you keep hiding. More hide and seek – unless you change the rules.
Steal an Education from the Business Broker
Small business owners need to talk to a business broker once a year. That’s it. That’s the advice. Once a year. Every year. Stop running. Stop hiding. Spend a few hours talking with a business broker. Share your financials. Answer their questions.
Find out if the broker, who makes a living selling businesses, thinks your business is sellable. What do they think it’s worth? How do they value it? Be open. Ask a hundred questions. Challenge answers. Become a student. Then go back to ignoring their calls and running your business.
And the next year . . .do the same thing with a different business broker. See what’s changed over the last 12 months. See how a different broker looks at your business, approaches the process, and sees the opportunity. Ask the same questions, and then compare the answers. Educate yourself over, and over, and over again – and do it at the broker’s expense.
Do this once a year.
Say it takes you 4 hours a year to fully engage this process (provide financials, answer questions, etc.) Say you do it for 10 years. That’s 40 hours invested pursuing success in what will probably be the biggest financial transaction of your life (if it takes place). It’s so simple. The ROI is astronomical and so clear.
How is it that you’re not doing this?
Maybe you feel bad about this approach? If so, feel free to tell the broker exactly what you’re doing. Tell them you’re not ready to sell but you’re ready to learn more about how they might approach the process in the future. I guarantee you most brokers will enthusiastically embrace the opportunity to talk with you.
Be Astonished on Your Own Terms
Small business owners get a special look on their face when they learn their retirement dreams are dead. It’s a mixture of despair and astonishment, and it comes right after the broker says “we can’t sell your business.” Don’t wait to be astonished. Do it now, while you have years to take what you learn and apply it to creating a business you can sell. Stop running.
Stop hiding. Change the rules of the game. Steal an education from a business broker.