20 Aug Are You Shaking Hands or Hitting Send?
We recently received an email from a business broker telling us that some buyers, even after signing a Confidentiality Agreement, went out to the place of business and talked to the owner. He also had some buyers who wanted to spend a week in the business to see if they were comfortable in it.
Unfortunately, the internet and the listing web sites have created some new problems. In the days of newspaper advertising, the ad contained a telephone number (no website or email address) so potential buyers had to call for more information. During that initial phone call, they were given as little information as possible and were encouraged to come to the office for more information. Obviously, many did not go any further than the first phone call, but those who did come to the office were considered fairly serious buyers. (From one particular brokerage firm, less than 50 percent of callers came in to the office and one out of 12 to 15 ended up buying a business.)
The whole point in getting the buyer into the office was the personal contact. The broker could find out the buyer’s reason for wanting to buy a business, how much money he or she had to invest, and what other types of businesses might be considered.
Today, the listings in the various listing sites contain very specific information – often everything but the specific address. (And even that can often be figured out by a savvy web researcher.) The potential buyer emails the broker who then, in most cases, emails the prospect an agreement of confidentiality or similar form. When that is returned, more information is supplied. From there, most firms attempt to set up an appointment. Many may even attempt to have the potential buyer fill out a questionnaire, etc.
What’s missing? Up to this point in the process, there is still no personal contact! The vast majority of potential buyers who actually buy a business will buy something other than what they initially called or emailed about. If a buyers only contact with a broker is “electronic” the chances are high that the relationship will end as soon as the buyer’s interest in that particular listing ends. The broker will have missed out on the opportunity to sell the buyer on working with that particular broker as well as the opportunity to introduce other listings that may be a better fit based on information gathered best in a personal meeting.
Buyers (real ones) are critical to the success of a business brokerage firm. The internet age has probably made both buyers and brokers more comfortable doing business from their own home or office. Buyers today want to play it safe and do everything by email. With the increase of business brokers working out of home offices, many have to meet their prospects at a coffee shop, etc. There is nothing wrong with this as long as brokers are willing to leave the comfort of their home office and go out and meet with their buyers.
All this to say that we realize it is probably harder than ever to get buyers into your office, or to a coffee shop, for an initial meeting, but this should still be the goal.
The whole purpose of advertising, regardless of whether it’s newspapers (do any brokers still use the newspaper?) or the internet, is to meet personally with the buyer.
Now, back to the email we received from the business broker, we don’t have space to fully discuss the buyers who want to work in the business for a week to see if they like it. Maybe, after a P&S is agreed on and all contingencies met.
We were delighted to find out that this is exactly what our friend did.
