Negotiation is one of the most important skills that an entrepreneur should possess. Before purchasing a business, you must have an appropriate negotiation strategy so that the best results can be obtained out of the deal. The procedure varies from business to business and depends upon whether you want to buy only the assets of the business or wish to obtain the business contents or are willing to buy the rights to an existing business.
Whatever the case may be, you need to have adequate knowledge regarding the potential pitfalls. The following steps will help you sail through the life-changing process of negotiation during purchase of a business.
Examine the marketplace
On the basis of the industry with which you are involved, the process of negotiation differs. In case of some businesses, such as those which deal with materials and industrial services, negotiation should be done depending upon market fluctuations. You may keep yourself prepared by being a part of networking events arranged for the industry you are dealing with or going through trade publications. When you are examining the marketplace, it would also be great to take the advantageous economic factors into consideration as you begin negotiating.
Make the initial contact
There are a number of ways in which you can come across a business for buying. For those residing in a small city or town having many businesses that are owned independently, the negotiation procedure can be started through personal business contacts or word-of-mouth.
The prospective seller can also be reached via social networking platforms or a plethora of online seller/buyer sites which you can easily find out just through Google search. You may also find a business that can be bought through sites like Ebay and Craigslist. Once you contact the seller and find out whether the person or the entity is legitimate, the next step would be to arrange for a meeting. It would be better if the venue for the meeting is the business location.
Hire a broker
If you are novice buyer, remember that there is no substitute for actual experience, so the best thing is to hire business brokers in Sydney who would help you sail through the buying process. While purchasing the business, there are many aspects that need to be taken into consideration, such as the goodwill, the assets, and so on. That is why you require brokers, since they have considerable experience in dealing with comparison of prices across particular industrial domains. Thus a broker can find out whether or not the seller is asking a reasonable price.
Make an offer
Prior to making an offer, scrutinize the amount of money the offer would cost and whether financing is needed. Do you want some performance criteria (implies whether the business should perform in a specific way for some pre-decided trial period prior to the eventual close) to govern the final sale of the business? A very significant factor is the examination of the current inventory (if you wish to buy it), to determine whether anything is obsolete.
Other than getting the assistance of a broker, as a buyer you require an accountant’s counsel for having a grip over the intricate financial details before the actual signing off takes place. You may also seek the help of a valuation specialist for obtaining a quote for the business value estimated.
While buying you may face the difficulty of obtaining loans from banks, as many banks hesitate to offer loans to buyers, especially those who are purchasing a business for the first time. So, the best thing you can do is to look for private financers, or even associates or family members.