How experienced is the buyer?

If you are thinking about selling your business, it’s good to know what the buyer pool looks like.

After your business is on the market, your broker will handle inquiries from all types of individual buyers.  Statistics indicate that approximately 90% of people who inquire about a business never buy one. The lineup of "tire kickers" is endless and can include people without sufficient funds to acquire your business; people incapable of running your business; competitors, customers, or suppliers who are trying to figure out what is for sale; and bargain-hunters with unrealistic price expectations.

There is no need to expose the confidential information of your business to "tire kickers.”

You should work with a broker who will qualify buyers, not release confidential company information to the unqualified, and preclude you from dealing with those who are not good candidates.

The list of potential buyers can include candidates like these:

First-time buyers: Most inquiries received by brokers are from first-time buyers.  Because this is their first time, many have very little knowledge about the business acquisition process, how businesses are priced, or what their expectations should be. It's hardly ever easy to get the individual first-time buyer through an acquisition – they are usually squeamish. About 90% of these buyers don't know exactly what they want, and only a very few buy the business they first inquired about.

Income-replacement buyers: For a variety of reasons (layoffs, corporate downsizing, burn-out, job relocation, etc.), many potential buyers are exploring buying a business to replace the income from their job. Often, those buyers lose interest after they gain a better understanding of the required investment, the amount of work, and the risk.

Mid-level executive buyers: What about the 10% of the buyer pool that is not "tire kickers"?  Although there is no such thing as a typical buyer, one group of legitimate buyers are mid-level executives from the corporate world who have entrepreneurial dreams and have saved just enough to afford a business that can replace their current employment income.

Serial entrepreneurs: Another type of buyer is the former business owner - an entrepreneur who has “done it before” and is interested in doing it again.  Having been through the process of acquiring and building a business before, they can typically reach a decision sooner than a first-time buyer, and the whole process has the potential to be more efficient.  But this type of buyer may be a lot tougher negotiator, and it may be much more difficult to reach a mutually beneficial agreement.

Individual buyers are all different and have unique backgrounds, life stories, and motivations. The one thing to remember is this: To sell to them, you must identify (and ideally resolve) the business sale obstacles you face or, at the very least, disclose those obstacles early in the process.

The unlimited supply of "tire kickers" is one of many reasons that you should engage a business broker to sell your business as opposed to trying to sell it yourself.