During the sales process it is essential that you qualify your buyers at different stages. When you get an inquiry or have an inspection then make sure it’s not just about the buyer asking questions about the business, make sure that you get your fair share of information as well.
In the current economic climate landlords are becoming more reluctant to let good tenants go, although they cannot legally refuse the assignment to a good incoming tenant if the application is not put together properly then it’s quite easy for them to knock it back.
To stand the best chance of getting the assignment through you need to submit a solid application (I will cover this in more detail in another post) from a good candidate. The first stage in this process is to make sure that the buyer inquiring about your business is actually qualified to buy.
The questions below can easily be answered in conversation with your buyer, its actually quite easy you just need to get them talking and steer the conversation in the way that you need it to go. Most people are really happy to talk about themselves so use this to your advantage!
Throughout the entire sale you should stay in control of the process and the pace. Naturally you don’t want to waste your time so getting this information early on can help a lot.
The answers to these five questions will help you to understand if the buyer is serious and if they are likely to stack up for you and for the landlord.
- How long have you been looking around?
In the current market buyers have plenty of choice, if you come across somebody that has been looking around for a long time then it is likely that they are not committed/serious.
If I speak to somebody that has been looking around for 12 months I can’t help but ask why its taking them so long to find something. Is it the market or is it them?
As a rule it is usually because they are not at the point where they are ready to buy “I am just looking around to see what’s available” “I am not really sure what I am looking for” Blah Blah Blah
Whilst it is important not to rule these people out too quickly you probably wouldn’t want to spend too much time with them at this stage.
Get straight in there and ask them what timeframe they are working to and if it does not suit you then move on.
Generally speaking people that have been looking around for ages are less likely to take action.
- How much industry experience do you have?
Lack of industry experience is going to be one of the angles that could cause the landlord to legally refuse the assignment of the lease.
Finding out what the buyer’s experience is early on will help you to plan how to deal with this if you get to that stage with them.
If your buyer has previous industry experience and, if they have owned businesses before then this is going to be a big advantage but its not the end of the world if not.
If your buyer does not have experience then you will need to consider this from your landlord’s point if view and work on a plan to minimise the risk in their mind. A couple of things that really help with this is a well thought out and well presented business plan and an extended handover training period.
There are of course other things that can be done but as mentioned above we will cover the details in another post.
- Are you going to work here on your own or with a partner?
You would be surprised how many people are looking at businesses without their partners knowledge! It’s a good idea to do some fishing about this early on, the support (or not) of a partner can make a big difference to the deal going ahead or falling over.
If they are planning on working with a partner and you are not then there is a good opportunity to highlight the savings that they could make on staff wages.
- What is your financial situation?
Its not uncommon for people to dishonest about this, many “Cash Buyers” end up needing finance and some people find it acceptable to put forward an offer even when they don’t have the money in place.
I am sure I don’t have to tell you how hard it is to get finance these days to buy a café, its good to know your buyers situation early on and if they need finance then dig a bit deeper and see how they plan to go about getting the funds. Don’t be afraid to ask how they will secure the funds and what other assets they have.
Many people worry about asking questions like this but bear in mind that you are most likely opening up about all of your financial accounting and business operations so you are well entitled to ask.
If they do not have cash funds, have little security and are planning to go to the high street bank I would be a little cautious!
- What information would you like?
I love this question as I think you can tell a lot about a buyer by what they ask for and in what order.
The most experienced buyers typically ask for the lease early on, it stands to reason that this is one of the most important documents as without a decent lease and term the performance of the business and fit out etc don’t really matter.
If people ask for financials before they have even looked through the business profile, had a chat with you or been in for an inspection then I find they are either just being nosey or they are not experienced with the way things work. We get quite a lot of this from the internet “I just saw your and, can you send me the last two years P&L”
Asking for such detailed information so early on is usually bit of a red flag but as mentioned above you don’t want to rule these people out too early on either. If this happens just follow up and tell them that the financial info is all available but you would like to have a chat and meet them first.
We generally won’t give out that detail until we have got enough questions answered to know that they are a suitable buyer and even then we try and push for an inspection first. By doing this you can get to know them better and hopefully you can get them emotionally engaged in the sale as well.
I hope this helps, feel free to add any other suggestions that you have about what to ask buyers in the comments below.
If you would like to learn more about preparing your cafe for sale then why not book in a call with me. On this 30 min call we will cover the following:
- • What the current market value of your cafe might be.
- • The steps you need to take to prepare for the sale.
- • What the market is like at the moment.
- • How to make sure that your cafe stands the best possible chance of selling.
There is no charge for this call and there is no obligation. At the end of the call if we think that we can help you we will let you know about how we work and, if we don’t think we can help we will give you some advice about alternative options.
Either way you will come off of the call with a much clearer idea about the potential value of your business and of what you need to do next to achieve a sale.
Click on the link below to book in a time that suits you best, once you have selected a time you will be taken to a form which has around 6-7 questions about your business that will help us to get a better understanding and save time on the call.
Book your call here