A large portion of baby boomers are business owners because the scarcity of jobs when they entered the workforce drove them to create their own jobs and become...
How Many Buyer Inquiries Should I Be Getting
Ok, I have my business advertised for sale. About how many responses should I be getting per month?
Unfortunately, it is often quite difficult to predict how many responses you should be getting on your business for sale. It does depend on a lot of variables.
Here is a brief list of variables that will impact how many buyer inquiries you get:
- Price of Business – The business shouldn’t be priced too low or too high. I have actually seen businesses that were priced too low, and we didn’t receive too many responses. For more info on this topic, see our article on valuing a business.
- Seller Financing – Buyers love sellers who are willing to finance a portion of the sale. For more information on this, see our article on Seller Financing. We almost always recommend seller financing if you can afford to do so. This will really help you get more responses.
- Location business is advertised in – A business advertised for sale in Los Angeles County or in Chicago will obviously get more activity than one for sale in a remote town in South Dakota. If it makes sense, try advertising your business for sale in the nearest large town. Some locations are also much more competitive than others.
- Cash Flow/Profitability – This is definitely one of the most important factors buyers look at. If you are selling your business and you left the cash flow/profitability blank, then you can expect significantly less responses. With the current state of the economy, there is a glut of businesses on the market that are not profitable. This was not the case a few years ago; however, we must face reality and realize that there is a ton of businesses out there that aren’t profitable and are priced extremely reasonably.
- Title of Ad – The title of your ad should catch buyer’s interest and pull them in. This can be a very difficult area to test and measure. I recommend changing the title once a month until you find something that works. For certain businesses such as a liquor store, a simple title works best. For other unique or esoteric businesses, a simple catchy title might work best. Advice from an experienced broker is priceless in this area.
- The Ad Copy – I think the ad copy is overrated. I have found that a simple, to the point ad works best. Ads that are too lengthy with big blocks of text get few responses. A short, bulleted list typically works very well. A common mistake here is to talk about boring features of the business such as square footage or number of years in the business. Remember, the purchase of a business is often an emotional decision, so it is best to keep this in mind when writing an effective ad. I like to include such items as: seller financing available, business has been appraised, clean financials, short operating hours, owner retiring, lifestyle business, repeat customers, cash business, etc.
What can I do to increase the number of responses?
- Price the business reasonably
- Offer seller financing
- Advertise the business in a large metropolitan area
- Report a cash flow figure, even if it is a projection
- Develop a catchy title
- Write a short, to the point ad, with a bulleted list of the highlights
How many responses should I be getting per month?
The numbers of responses have been less in the last few years. This is because of increased competition and also because of our current economic situation. About five to ten years ago, I would get anywhere from 2 to 25 responses on most businesses. Now, a good number to attain is about one to five responses per month. A really good ad will pull 10+ responses per month, but this is rare in today’s economy. I have sold businesses for over a million dollars, in which I got maybe a total of 15 responses, so keep in mind that it only takes one buyer to sell your business.
I got way more responses from Craigslist. Why shouldn’t I just use Craigslist?
Flakes, flakes, flakes. Few real buyers look on Craigslist. I have sold less than a few businesses off on Craigslist in the last ten years. For one of these, I didn’t even advertise it in the business-for-sale section of Craigslist. This was for a medical practice, and I had it in the jobs section.
You should use Craigslist if you have the time. It’s free so you might as well use it. It does work for certain types of businesses, specifically under $30,000 in asking price.