Welcome back to Becoming a Better Business Broker in 30 Days!
This concise series title describes exactly what we hope you get out it - becoming a broker that can close more deals with less work.
If you missed yesterday, check out Becoming a Better Business Broker Day 11: Marketing Strategies for Listings.
Have you ever winced before telling a client what asking price you think you should go with? If that was a yes - you're in the right place because today we cover How To Manage Client Expectations.
Setting the Stage Early
Similar to our advice in filtering sell-side leads, managing client expectations begins with your first meeting.
This starts by not viewing your first meeting with a prospective Seller as a 'sales meeting' and hard close the client with a listing agreement with a 12-month commission tail. Besides giving off used car-salesman tactics - there are a few selfish reasons for not doing this:
- The prospect's business may not be saleable
- If you pump up the Seller's ego - they will want to equally boost their asking price.
- You'll build a reputation for doing this - burning bridges within your valuable referral network.
Instead, like a first date, you want to keep things casual. Start with the following steps:
1) Initial Consultation
Use this opportunity to understand your client's goals and motivations. This understanding will guide your strategy and help manage their expectations.
For example, do they need to sell in 6 weeks? As that's a tough assignment. Or do they think their money-losing business is worth 10x revenue? This one is a true story, sadly.
We also recommend using this initial consultation to explain the business-for-sale process, the standard commission model for our industry, and the average length of time to sell a business (our rule of thumb is up to 12 months for small deals). In our experience, providing this type of transparency builds a lot of trust, leading to a higher 'closing ratio' anyway.
2) Market Analysis
When presenting your valuation, support your pricing strategy using transaction data - as it is hard for many owners not to take a low valuation personally.
To make this conversation easier, some brokers use DealBuilder's valuation tool as a scapegoat for their analysis, "this is what the system is saying, but really, if it were up to me - it would be way higher!"
Okay, don't actually say that, but you can download and share the DealBuilder report to give your Seller more data for their decision-making process.
During the Deal
Okay, you signed the client and you've listed the deal to the marketplace. Here's how you manage their expectations throughout the process.
Continuous Communication
Sellers get super nervous about the sale process - especially those first few days of 'listing'. As a result, regular updates and open lines of communication are crucial. Keeping clients informed at every step ensures they feel involved and valued, reducing anxiety and building trust.
- Regular Updates: Whether it's weekly calls or email summaries, consistent communication keeps clients in the loop. An easy way to do this with DealBuilder is to send auto-formatted buyer metric reports.
- Get Buyer Feedback: Clients are always going to want to know 'why' a Buyer passed on a deal. While they won't always tell you, try your best to follow-up with Buyers and see what feedback they can offer - they can also check-off their reason for passing on the deal using the 'interest indicator' tool in DealBuilder.
- Be Proactive: Did you find an error in the CIM? The buyer didn't qualify for financing? Landlord is killing another deal? It's important to remember that shit hits the fan (to some degree) on every deal - often it is our responsibility to be the bearer of bad news. That said, your client would much rather hear it from you first than the Buyer or Banker.
Navigating Challenges Together
As mentioned above, no sales process is without its hurdles. Preparing clients for potential challenges and having strategies in place to address them reinforces your role as a trusted advisor.
- Scenario Planning: Discuss potential challenges and how they could be addressed - this planning can happen in the first meeting. For example, preparing a Seller that many buyers will request Seller Financing as a part of the transaction - ensure the Seller understands what Seller Financing really means. This proactive approach helps mitigate surprises.
- Flexibility: Encourage an open mindset. Flexibility in negotiations or deal structure can be crucial in overcoming obstacles. The best way to do this is citing previous deal experiences, "I once saw a buyer increase their offer by $200,000 if the Seller stayed on for 12 months" this gives a Seller a much better reference point.
Celebrating Milestones
Recognizing and celebrating each milestone in the sales process (like having a countersigned LOI 🎉). This can help maintain momentum and keep spirits high even when facing deal-induced migraines, which occur on the 'smoothest' of deals.
- Acknowledge Progress: Small wins, like securing a qualified buyer or removing LOI conditions, deserve recognition.
- Stay Positive: Energy is contagious - both directions. Your client will pick-up if you're getting anxious or nervous about a difficult point in the deal. Therefore, try and keep a positive outlook in these moments as it will help keep clients motivated throughout the process.
Conclusion: Become Your Client's Trusted Advisor
Managing client expectations starts with education, clear and constant communication, and being proactive. By setting realistic expectations from the start, maintaining open communication, anticipating unpreventable challenges, and celebrating deal progress, you position yourself as more than just a broker—you become a trusted advisor.
Tune in tomorrow for Day 13 where we cover, How To Handle Multiple Offers.
If you want to learn more about automating your business brokerage with DealBuilder, please visit our site or book a demo here.
