10 Mar Buyer Psychology
In our continuing series with Glen Cooper, he covers the 5 hardest things to learn in business brokerage. In the last webinar “Part 5 Finding Buyers Who will
Actually Buy,” we got Cooper’s take on one of the largest hurdles that business brokers face, and that is how to find buyers that are both serious and capable of buying. Glen Cooper is the founder and managing partner of Colorado Business Brokers, the 2020-2021 President of CABI (the Colorado Associate of Business Intermediaries), founding member and fellow of the IBBA, as well as an author and coach for business brokers.
Tapping into Psychology
A reoccurring theme for Mr. Cooper is psychology. A savvy business broker is one who is constantly thinking about the psychology of the buyer, the seller, and everyone involved in the process. This focus on psychology manifests itself in a variety of ways. Digging into what motivates people, and why, should be at the forefront of everything that you do.
It is important to remember that, in Cooper’s considerable experience, a mere 2% of prospective buyers are truly serious about buying, or are really in a position to buy. Weeding out the other 98% is a key part of any successful business nroker’s process. During the webinar, he covered many steps that you can take to find the 2% of buyers that are serious, ranging from NDAs and Zoom calls to judging your own gut instincts regarding whether or not a buyer is serious.
Your Role as an Educator
Additionally, you should keep in mind that prospective buyers will enter the process with a considerable amount of fear. In particular, they will be afraid of making a bad purchase. Legitimate buyers will almost always want to know why a seller wants to sell in the first place.
You need to be able to answer that question in a clear fashion. As Cooper points out, business brokers and M&A advisors need to provide that answer while simultaneously outlining the upside of the opportunity. Always remember that you are an educator, and one of the best ways to educate is through the power of story. Crafting a business’s story goes beyond facts, figures, charts and numbers.
Telling the Story of the Business
Fear is also at the heart of why so many sellers want to know a price is determined. Again, wanting to know how the price is determined ties into a buyer’s fear of making a bad deal. Cooper states, “What the buyers are looking for is something in the story of the business that fits them like a glove, so that they can continue on as the primary owner of the business…They become the protagonist in the story.” It is up to you to listen to the buyer and understand their needs. It is only then that you can find a business that will actually fit the buyer like a glove.
Part of the story of a business involves how it can grow in the future. Future growth means that the story of the business can continue, or in other words, that the business has a future. In our next article, we will look at some of Cooper’s key points on what business brokers should do to find serious buyers.
