Entrepreneurs who function using Occam’s razor to determine their strategic decisions inevitably fail to see the three-dimensional world of corporate business behavior, ultimately leading to results that are as superficial as the guidelines they use to build profitability. For those who favor simplicity as the solution to tactical problems, profitability is seen as the determinant of a business’ sales value. In the real world, valuations are far more profound, yet even strategic, open minded leaders fall for the myth that their company will fetch a price that is in keeping with its returns.
1) Know Your Value
Macro-economic conditions such as exchange rates and industry trends directly influence company valuations but supply and demand laws will always have an impact on any widget being sold in a healthy open market. Those who are aware of the person they will be negotiating with as well as the precise market-share predictions, profits and industry earnings related to their business instantly earn themselves more negotiating muscle.
2) Choose Your Cards in Advance
One of the most widespread burdens profitable businesses carry into negotiations is their inability to function without their existing owners. When entrepreneurs have developed their businesses around themselves to the extent that profitable functioning cannot occur without their help, the company’s value is as good as it was on the first day it opened.
Buyers tend to seek turnkey operations. If this was not an aspect they valued, they would be likely to start their own companies from scratch.
Leaders who predict a sale within the foreseeable future can build a stronger negotiating position years in advance by weaning their businesses early so that they can function independently by the time money changes hands.
3) Never counter your own ante
Negotiators who can hold their current position sturdily are rare. When faced with no response to an offer, only the brave restrain themselves from filling the silence with a counteroffer to their own figure.
In many cases, buyers purposefully use this tactic to take advantage of the human desire to avoid uncomfortable silences. Skilled negotiators can use these gaps in conversation to ask for their desired terms and costs – an obvious yet seldom-used option.
4) Learning when to fold
One efficient negotiating strategy demands that sellers request facets that they don’t want so that they can give the buyer a sense of having received a concession but the broader strength of negotiation lies in the capacity to step away from an unsatisfactory offer.
In many cases, folding is done when potential buyers indicate that they don’t see value in the seller’s hand but in some cases, the opponent’s bluff can be called by walking away. In these cases, accurately measuring the buyer’s perceived value wins the best deal.
5) Control your tells
Average poker players remove their tells from the game. Brilliant ones send out false but believable signals that turn the game to their favor. Emotive responses to undesirable offers from sellers are often enough to make them back-pedal into territory that is more favorable. The average person offers 30 percent less than they are willing to pay. With a few acting skills under your belt, shocked responses soon place those minimum offers on the back-burner, leaving room for targeted, realistic negotiations.
Macro-economics and industry trends are overarching factors that appear to reduce the power entrepreneurs have over business value but, with the help of a clutch of highly maneuverable facets that can be wielded to increase demand, even at heftier prices, entrepreneurs can choose the cards they are dealt to increase their business’s sales value.
This article was contributed by BusinessesForSale.com, the market-leading directory of business opportunities from Dynamis, the online media group also behind FranchiseSales.com and PropertySales.com
