Module 7-: I am an advocate for buying existing businesses up for sale because I believe that a person who buys an existing business can leverage on the experiences of the seller. You don’t have to worry about the learning curve process and instead of spending your first few months or years of business learning the ropes, you immediately start earning money.

When you set up a new business, it is likely that your first few months or years would be spent trying to create the necessary awareness for your business. Potential customers do not know you or trust you yet hence; they might find it difficult to trust you or patronize you but when you buy an existing business; the business already has customers that you can acquire and retain. You would only need to canvass for more customers and work harder at retaining the ones you already have.

But buying an existing business is not to be taken lightly. It is a risky project that might end up badly for the buyer if wisdom and caution is not applied. For instance, you might end up buying a business that is on the brink of collapse or a business that has received a terrible blow to its image and reputation. You would really have a hard time trying to rebuild reputation and convince people to patronize you again.

You also have to be very good in the art of negotiation. Negotiation is like a game that always ends up in favor of the smartest person. Sometimes, it may be a win-win situation and at other times, a win-lose situation but however it ends; you certainly don’t want to be on the losing side. So how do you negotiate when buying an existing business, so that it always ends in your favor? These tips would help you-:

Buying a Business – 10 Negotiation Tactics and Strategies

1. Enjoy the Art-: First, you must understand that negotiation is an art and even though it’s a serious business, you must be prepared to enjoy it and learn from your experiences. Let go of all your anxieties and be open-minded. It is important to adopt a take it or leave it approach if you want to gain the upper hand. Don’t be too anxious or desperate; even if you are, try not to let it show.

2. Have all the facts-: Make sure you do your home work well and have all the facts that you need to back up your negotiations. For instance, you have to consider all the business clauses, the company’s financials, competition, strengths and weaknesses. When you have all of these facts, you would be able to make an appropriate offer.

3. Understand the seller-: I already mentioned that this thing is a game. And to play, you have to understand the seller. One of the things you must know about the seller is their reason for sale. For instance, if a person is indebted and trying to sell off their business in order to pay off these debts, you would already know that the cash advance you will offer such a seller is very important to him.

Therefore, you can tweak this situation to your advantage and negotiate better interest rates or extended period of payment on the balance. Study the reason for sale, the seller’s psychology (how he thinks and responds to offers) and also, consider urgency- a person that really needs to dispose of his business urgently might be a little bit more receptive of offers.

4. Be sensitive-: The truth is that this is an emotional period for the seller. Definitely, he must have built a strong attachment to his business which is about to be broken off so expect him to behave irrationally sometimes, become short-tempered or even be unreasonably. It is your duty to stay calm, know what you want and calmly try to make the seller come on the same page with you.

5. Consider ‘What if’ scenarios-: Also, you need to consider diverse situations and have a solution for each scenario. You don’t want to be caught unawares at any point in time.

6. Consider your own personality-: Another factor that has to be put into consideration is your own personality. If you are a ‘softy’ for instance and you are easily ‘bullied’ or ‘convinced’ to change your mind, you might want to do away with this attribute during the negotiation process. Also, if you are ‘Mr. Nice’ who is very emphatic; well, that’s a good trait that won’t get you far in negotiation. Negotiation involves having a clear goal in mind and closing your eyes to any form of distraction that may prevent you from achieving your goal. Don’t be bullied into joining the losing team.

7. Be Flexible-: I know I said you should have a clear goal in mind and stick to it but that doesn’t mean that you should be rigid. Business purchase negotiation involves two parties with separate needs and goals in mind and for it to work out favorably, both parties need to find a balance. This is where point 5 becomes useful and important.

8. Understand the role of professionals-: A lot of people leave the business purchase negotiation process to their lawyer which is a good thing but you need to understand what the role of your lawyer is and how it affects the business purchase negotiation process. First, you must understand that your lawyer’s priority is to protect your interest. Your lawyer would not run the business for you hence your goals and offers should solely be yours.

Some lawyers haven’t even bought a business of their own before and then you allow them to dictate what your offer should be to you? I am not against using a lawyer and indeed a lawyer has a vital role to play in the business negotiation process; what I am saying is that your lawyer has to work with your offer and negotiate a deal that would help to achieve your goals.

9. Investigate properly-: Some sellers hide some facts from potential buyers; facts that are sensitive and which the lack of knowledge of might be dangerous. Hence, it’s smart to do your own private investigation before you seal the deal.

10. Learning the art of negotiation takes time and it is unlikely that you would be a pro the first time you try. Therefore, you should try to give yourself sometime to learn and become a professional negotiator.