Do you know the difference between a consultant and a business buyer? A consultant knows 101 ways to buy a business and arrange funding but doesn’t know any sellers.
For as long as I have been training people how to buy businesses, I am continually surprised at how many get stuck on the very first action step – prospecting for a qualified seller.
Since a business buyer can generate more wealth from a single purchase than a consultant can earn in a lifetime from consulting fees, let’s make sure you do not become a business buyer turned consultant.
When prospecting for contacts for any business activity ranging from purchasing to sales, from buying companies to getting financing, the process is essentially the same. It all starts with a name. From there on every interaction with that person is an opportunity to generate referrals to other candidates for the designated business activity.
Since this blog deals with purchasing companies, let’s assume that you want to contact owners of the type of company you want to buy. And, let’s also assume that you have already structured your presentation to make to the owners of these businesses and that you have used one of several techniques taught in my Bizar Financing course to identify and contact your first prospective seller.
When you call or meet them, at some point in the approach phone call or in-person presentation they are either going to express an interest in exploring your purchase of their business or they will reject the idea. If they agree to explore it, you continue to the next step with them. If they reject it; that is your opportunity to ask for referrals to other owners they know who might be interested.
You might say -
John, I can appreciate that selling is not right for you at this time, but who do you know in this business who might be interested in selling?
If names are not forthcoming, you might ask -
Who do you know who is up there in age and may be thinking about retirement?
Who do you know who is struggling and may want a way out?
Do you know anyone who is overworked or under-funded and may want a partner?
Who’s out there that you hate having as a competitor that you would love to see bought out?
If you are really creative, when an owner rejects the idea of selling their business, you might ask them -
Are you open to having a business arrangement with me where I acquire other companies in this business and add them to your company?
If he asks, “What do your mean?” You can respond with -
I would be interested in helping you build your business by acquiring other companies and adding them to your company. I would handle all the details including the financing and with each company acquired I would earn a percentage interest in your expanding business. I could probably double or even quadruple the size and profitability of your company in the next year or two and I can do it without risk or cost to you.
If that tweaks his interest, it’s your opportunity to ask for an appointment to fully explain the rollup strategy and how you both would work together to build something really great. If it doesn’t tweak his interest you continue on with the paragraph above to get referrals.
Buying a business is in many ways similar to selling an expensive product or service only the payoff for you as the business buyer is much bigger. The two things you must be able to sell are yourself and your ideas. Once you master the art of the sale, you must master the art of prospecting for your ideal customer. You can’t sell them unless you get in front of them. Have I sparked your creativity?