21 Oct Remember to Factor in the Human Equation
Recently, highly-accomplished business broker Doug Robbins, founder of Robbinex, sat down for our October 15th webinar entitled “Six Ways Buyers Value a Business.” Click here to watch this informative discussion.
During the interview, Robbins relayed some of his key thoughts on how business brokers should interact with their clients. In our previous article, “Seller Expectations and Misconceptions,” we covered some of Robbins’ key points for how business brokers should deal with misconceptions among their sellers. In this article, we’ll explore what business brokers need to do to get their clients ready to move forward.
As Robbins points out, many clients don’t really have the right psychology at the beginning of the process. Just because a client has approached you does not mean that he or she is truly serious about selling. Many clients will simply be unwilling to face the realities of their situation or make an accurate assessment of their business and its value. No doubt, this can be a lot to overcome, but often there is no alternative.
According the Business Development Bank in Canada survey of 2,500 clients over the age of 55, a whopping 80% of them had not given any real thought to what they would do after the sale of their business. As Robbins points out, client procrastination is often part of the client psychological equation. This general lack of planning can lead to scenarios where buyers are uncomfortable with a given seller’s motivations.
Another common factor comes in the form of clients who are overly emotional. The most obvious form is when a client has an emotional view of what their business is worth and refuses to listen to reason or market forces. However, clients can be emotional for reasons that are, to varying degrees, out of their control.
Robbins gives the heartbreaking example of a business owner who was diagnosed with pancreatic cancer and was given only 90 days to live. In this example, the owner was barely able to live long enough to sell his business. Clearly, a client under extreme psychological stress will typically not experience an optimal outcome.
Other intense psychological stressors such as divorce, intense partnership disputes or other personal problems can interfere with clients achieving the price they want for their business. It is vital that business brokers and advisors don’t overlook client psychology. If a client’s “head isn’t in the game” you will face an uphill battle.
Tackling everything from unrealistic views concerning price to emotional stressors and procrastination can make your job more difficult. It is critical important that you don’t become so obsessed with “the numbers” that you fail to factor in the human equation. After all, the human equation can make or break a deal faster than any other.