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“When You’re Negotiating To Buy A Business, How Do You Convince Them Their Business Is Worthless?”
This question actually threw me back and little…
- Destroying People Won’t Make You Successful [0:39]
- Is It Really Worthless? [0:57]
- What You Need To Do [1:37]
- Always Look For The Win-Win… [2:10]
Destroying People Won’t Make You Successful [0:39]
As many who know me personally would attest, I never ever condone destroying people and their views, you must always come from a genuine place of assisting and helping someone else.
So when I answered my students question, the short answer was…
“You Don’t Convince Them Its Worthless”
Your job is not to convince a seller the business is worthless, your job to is have a conversation and try to find a way to help them. If during that process you can save yourself some money then you’re heading towards a WIN-WIN scenario.
Is It Really Worthless? [0:57]
The other reason you shouldn’t be convincing the seller their business is worthless is because you need to realise it may not actually be worthless.
Just because you don’t see value and it doesn’t represent much to you, doesn’t make it worthless. You can’t just take the financial performance into consideration.
Consider YouTube for a moment.
Google paid $1.65bn to buy YouTube when it wasn’t making any money. It took Google a few years to monetize YouTube with its advertising model.
What about Instagram?
Facebook purchased Isntagram for $1bn and Instagram did not, and as far as I’m aware still doesn’t, make any money what so ever. Not a single cent in revenue.
As an inexperienced buyer you might look at Instragram and think its worthless but the team at Facebook, they saw value worth over $1bn.
What You Need To Do… [1:37]
What your job as a buyer and negotiator is to do is to build rapport.
Get to know the sellers situation, ask questions and then reflect on their situation while you look at your own personal circumstances.
As my good friend Ari Galper from Unlock The Game says you are looking to “Find The Truth”
You want to discover what value does their business represent to you, and your situation. Nothing more and nothing less.
Once you understand the truth, all you need to do is present the facts.
Always Look For The Win-Win… [2:10]
When presenting the facts, show them how it has no value to you, show them where the additional costs are for you due to the way they have run the business and remember to show them where you acknowledge that value does exist in their business.
Then come to a mutual agreement and understanding about their business for sale. Create a win-win situation. Make sure that they feel they are winning, and make sure that you are also happy and feel like you’re winning.
At our 3 Day Business Builders Bootcamp our students learn over 15 different tactics and strategies for negotiations, and focus on creating a WIN-WIN. Not only do they learn the theory, they practice the negotiation skills live at the bootcamp so it becomes a part of who they are.
Remember its Not All About The Money!
If this has been of value to you, type your comments, questions and feedback below.
**UPDATE – SLIP OF THE TONGUE**
A slip of the tongue on this video made me say Google paid $165bn to buy YouTube, this was incorrect, but the text overlay and information in this post represents the true figure of US$1.65bn that Google paid to buy YouTube
Carl is the Author of Red Means Go! and founder of Business Builders Academy. He invests in and runs a number of businesses, and regularly teaches business skills through online training and live speaking events.
