Business sellers are typically ready for questions from buyers, but they sometimes don’t realize the importance of their answers in terms of the successful sale of their business. How you answer pivotal questions can greatly impact the price a buyer is willing to pay (or even affect whether a deal happens at all).
The biggest of these pivotal questions from buyers is also typically the first. They are going to ask you why you are selling – and you need to have a good answer.
Say you are a business owner who has been in the game for a long time. You built your business over the last few decades into what it is today. You may be approaching retirement age and looking forward to slowing down a bit from the hardy day-to-day experience of being an entrepreneur.
You may want to retire. Perhaps you need to focus on a health issue for yourself or a family member. Maybe you are just burned out and ready to spend every day on the golf course. Most of your reasons focus on the fact that you need to be finished in the entrepreneurial world. The reasons you are leaving your business have nothing to do with the health or future of the business itself – so you need to covey that to any prospective buyers.
So how should you answer the “why are you selling?” question?
Let’s answer this question by first telling you shouldn’t answer this question. If you are burned out and ready to retire, you shouldn’t let a buyer know. Telling a buyer you are tired of your business and hate going to work can give the impression that you have let things slide because you just don’t care about the business anymore. Instead, you should tell buyers that you are ready for retirement, but that you will miss owning your business.
What if you aren’t a retirement seller?
If you are a young and investment-driven entrepreneur, building a business with the intention of selling it may be your focus. Here’s the caveat. Be careful not to answer the question “why are you selling?” in a way that would make a buyer think you are trying to sell your business at its peak.
Instead, put the emphasis on your excitement for your next business venture. Showing that you will continue to be a motivated entrepreneur in the near future will tell a buyer that you are a motivated entrepreneur in your current business venture. You can also talk about ideas for growth within the business that you haven’t had the time or resources to put in place yet.
Whatever your reason for selling, you need to show that you have what it takes to stay in the game – you’re just ready for a new chapter of life that doesn’t include your current business. Answering the “why are you selling?” question carefully will help instill confidence in buyers that your business has room to grow and a great future ahead.
Are you ready to sell, but you want to make sure you answer this and other big questions in the best way? Have you chased away a buyer in the past by answering this question in a way that created concerns? Please share your experiences here or ask us any questions and we would be happy to help.