5 Ways VR Business Brokers Educate Sellers - VR Business Sales Blog

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Wednesday, December 17, 2014

5 Ways VR Business Brokers Educate Sellers

JoAnn Lombardi
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As a professional business broker, it is important to insert yourself as the expert on how to sell or buy a business among other needs based on the potential client. Before a seller lists their business for sale there are a few things you can do to educate your client and keep them satisfied with your services. Below are 5 ways VR educates its sellers when ready to sell their business.

Ongoing Seller Education

Even after you have finished making your presentation, have priced the business, and filled out the listing form and obtained a signature, keep in mind that you should be constantly educating the seller. We need to learn what his expectations, his motivations, his attitudes, and his perceptions are. We must fully and completely understand why he wants to sell his business. If he is unreasonable about what he expects for price, terms, and conditions, we need to educate him as to what is happening in the marketplace. He is not paying us to please him, or to list the business for any price that will make him happy and then not be able to sell it.

Transaction Progress

We further educate the seller by telling him about the progress reports we are going to be making to him, and that we will be calling him back to tell him what the buyers thought of his business. We may even assign him a certain time to call us every week to 10 days to tell us his gross sales and any further changes. Most important, when we are there we are going to tell him how to improve his business to help make that business more marketable. Most of the time, the improvements that we are going to ask the seller to make are very minor compared to their cost. When a buyer makes an offer on a business, he views the “reason for sale” to be as important as the seller's acceptance. The seller's motivation will give us something to work with when educating him on making the business more sale-able. In most cases, the repairs that have to be done are not nearly as expensive as what the buyer is going to deduct from the purchase price. We want to the business to be at its best.


Cover with the seller his position relative to the marketplace. You should continually reinforce the rationale behind the pricing. You want to let the seller know that he is competing with other businesses in the marketplace; not just with the same type of businesses, but also with those of a similar structure. He also competes with businesses that have the same down payments, or those in the same area. He has competition, and the most attractive business will sell first. If he really wants to sell, he needs to keep a positive eye towards making his business more marketable.


You also should cover with the seller the marketing strategy to make sure he understands what your advertising policy is like. You need to inform him that ads will not mention the name of his business, that ads may not run every week in the paper, or that you may not even advertise his business. You need to explain your particular office's strategy, and have the seller's commitment to these strategies.


It is important that the seller understands the selling process. Tell him how to improve his business, particularly the price, which will vary based on the cash flow, assets owned, and what is leased. His business must meet a buyer's expectations. We can relate this to him by telling him what the market trends are and what buyers in today's marketplace are expecting.

Whenever we discuss the evaluation with the seller, we should use phrases like "today's buyer" in “today's marketplace” is paying X amount of dollars for a business with a "cash flow similar to yours." It is the same with terms. Terms will vary based on available cash flow, interest rate regular seller financing, or something more. The conditions of the sale will enhance the sale- ability. In other words, if he is willing to give a non-competition clause, and/or provide a training period, and/or has good books and records or a conveyable lease, all of these conditions will enhance the sale-ability of his business. We need to explain to the seller that a business is not valued by what the owner feels it is worth; rather, it is valued by the marketplace at a given time, what today's buyer is willing to pay for this type of opportunity.

A professional business intermediary educates the seller towards good optimum price, terms, and conditions. In other words, a marketable business is one that is well priced with attractive terms. 


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