...continued from Part 1   6. FAILING TO ANTICIPATE AND PROPERLY RESPOND TO AN ENTERING PROSPECT’S NEED FOR INFORMATION Information that is dated, incomplete, or unexplained often leaves a prospect frustrated. Evasive answers, delays in producing information, but especially unpleasant surprises from current financial statements call into question the owner’s good faith. Suggestions: Understand that all prospective Entering parties need certain information to qualify their own interest and determine if the business is fit with their objectives. An Exiting owner’s credibility is enhanced, sustained, diminished, even destroyed by his communications, by the information given, by his responsiveness from the beginning of the process to the end. Prepare first by giving careful thought to what information you will  share with whom and when. Then, get it all together, and have it ready. Finally, get it right. Use correct and current information. Your Primary Business Consultant will know the core informational needs and how best to format these, while safeguarding confidentiality and keeping the process moving forward. Extremely sensitive and proprietary information should be shared only in the due diligence phase, after the Entering entrepreneur indicates further seriousness with a Letter of Intent. 7. JUST WAITING FOR SOMETHING TO HAPPEN OR GOING NOWHERE WITH INAPPROPRIATE PROSPECTS Exiting owners going alone or using business marketing companies or traditional business brokers often waste a great deal of time chasing or being chased by “tire kickers” who are financially and motivationally unqualified. Practitioners of traditional approaches work “a numbers game” and may get lax in qualifying suspects. Consequently, some clients experience much activity, while other motivated owners of fairly priced, but hard-to-sell businesses, anxiously wait for any indication of interest. SBA statistics and business brokerage trade publications agree that upwards of 4 out of 5 attempted transfers aren’t successful. Lack of focus and almost exclusive reliance on a single tool (newspaper advertising or video packages sent into a national market) with little or no follow-up account, in part, for this dismal record. Suggestions: Marketing plays at least as significant a role in the successful transfer of business ownership to third parties as it does in the successful sale of any other product or service. Become informed about your marketing options. What should you look for? A well conceived marketing plan will have focus and creativity, the missing pieces of traditional approaches. It must be comprehensive in design, yet target sources most likely to produce appropriate prospects. The individual, corporate, or equity group who is the best prospect is the one who can meet all or the most important of the Exiting owner’s goals. There usually are several parties capable of playing that role and frequently, they are found in the not-so-obvious places. Start by identifying various groups and/or types of individuals based on a careful review of possible operational, market niche, location or other types of matches. It is necessary to find out how these prospects are qualified and to confirm if they really are. Primary Business Consultants not only have the soundest approach to do this, but the experience and successes that validate it. Understandably, Exiting owners often become over anxious and impatient for results. However, to find the better match, one needs to allow enough time for the process to work. 8. NEGOTIATING WITH ONLY ONE PROSPECT AT A TIME OR JUST COOLING YOUR HEELS When an Exiting owner gets emotionally invested in a single party, pursuing one prospect at almost any cost, he or she is dangerously close to giving away control of the process at a most critical time. The mistake of losing the probable leverage of competitive offers is implied in this warning- “If you have only one prospect, you have no prospect, the prospect has you.” While this risk is real, negotiating this way by choice need not turn out badly, if the Exiting entrepreneur remains disciplined, recalls his optimal objectives, bargains hard but fairly, and sticks with deadlines, Indeed, the ideal is to create the conditions for a controlled auction. What is obviously not in the client’s interest is the situation when there is little possibility of leverage. The Exiting owner just waits for something to happen because his representative either doesn’t know what to do, or if he did, wouldn’t do all that was needed because he couldn’t afford the extra efforts or didn’t have a great enough incentive. That describes many old-style business brokers working for a contingent success fee. Self-interest and economic survival dictates that they concentrate their time and limited resources on the most “doable deals” (usually high-demand, often under priced businesses), while treating the difficult-to-sell as “throw-a-ways” or neglecting them entirely. Suggestions: The successful third-party transfer of business ownership and achievement of optimal objectives generally requires a consistent, pro-active and actual best effort, wherever it may lead. A Primary Business Consultant can meet your need for results through a professional, business-like approach. He or she will be an uncompromised advocate of your interests, committed to using proven marketing tools to get results, bringing forward more new ideas when others don’t work, and willingly accountable by means of timely communication, scheduled monthly reviews, and documented efforts. Although it is desirable to have several prospects competing vigorously for your business, a reality check suggests this often will not happen. Treat every prospect as if he or she was the only one, for indeed they may be! Remember too that flexibility rooted in recognition of the need for a win-win between all parties and timely responses are usually essential ingredients of successful outcomes. 9. NEGLECTING THE BUSINESS Some Exiting entrepreneurs become so preoccupied with the details of the transfer process, their post-transfer aspirations, or allow themselves to be distracted by the emotional roller coaster of courtship and negotiation, that they stop “minding the store.” Should neglect produce a noticeable, negative impact on financial performance, expect some hard questions, and don’t be surprised if an Entering entrepreneur wants to renegotiate or backs away entirely. Also, declining sales or cash flow make it harder to get outside financing. Suggestions: This critical phase of your business career is not the time to drift or coast. Remember the importance that current information and credibility has for those seriously interested. Stay focused on the present, and on your business and goals. Do not neglect your customers, suppliers, employers, and the general operation of the business during the process. The right team of professional advisors under the leadership of your Primary Business Consultant will buffer you from many distractions and temptations, while keeping you informed and involved at the appropriate times. 10. BECOMING IMPATIENT One of the most asked questions regarding Exiting business ownership is: “How long will it take?” While some transactions have been consummated in one or two months, others have taken well over a year. It can take one to three months to complete an independent, third party appraisal. Another month or more may be required to determine the real objectives of the Exiting owner and design a customized plan. It can then take three to nine months to locate the appropriate Entering party and negotiate the terms of the transaction. You will need to figure another month or two for getting through the due diligence phase, securing financing, and closing the transaction. Suggestions: As you can see, a full year can be consumed in a properly managed ownership transfer. There is no uniform timetable for all businesses. If you are truly interested in creating an optimal outcome, and securing the ultimate reward financially for your years of hard work, planning and preparation for this inevitable passage, then you will understand the need to be patient and allow for whatever is required in your particular situation to properly mature and bear fruit. ***This is an edited version of Ch.10 Common Mistakes which Mr. Oestreicher contributed to the book: E4: Evaluating, Entering, Enhancing, and Exiting Privately Owned Businesses, authored by William W. Bumstead (2002)   <<Click here>> to download a printable copy of this article.