Case Study Lesson One is Win-Win We negotiate every day— play with the toys. As corny as it sounds, it often works wonders. Now, if you have a klutzy command post, spend a few bucks and buff it up before you put the shop on the market. Sellers should do the same thing as well in order to achieve a winwin. Understand sellers are usually sensitive to legacy issues such as what happens to the company name, how will the employees be treated, and their status after the sale (carrying their name on the letterhead as founder may help). Sellers often accept a lower price to protect legacy issues. And don’t forget about the practical issues such as medical insurance and expenses the seller is accustomed to the company paying. Attention to these could help lower the total price. So, just as in selling a product, probing and understanding the buyer’s motives may lead you to non-price issues that can be used reach Win-Win and either support or increase your total business price. In all cases, seek first to create a win-win. That’s lesson number one. Tom Crouser is senior contributing editor, chairman of CPrint International, and principal of Crouser & Associates, Inc. You can reach him at 304/541-3714, connect on Facebook and LinkedIn and follow his business tweets on Twitter @tomcrouser. Enlarge the pie before you slice—but pay for it first! By Tom Crouser trained or not. Some do it naturally, others not so much. Well, the biggest deal we will ever negotiate for is the sale of our business, and it will face us someday, trained or not. And lesson one is to understand there are Two Types of Negotiation: win-lose and win-win. Focus on the win-win to get the best deal. Win-lose is where I have a product and you have the money. The more I get, the less you have. For me to win you must lose and for you to win, I must lose. This is “Dividing the Pie” and unfortunately is the way many business owners think. There are tactics to follow in a win-lose situation (appear disinterested, person with the most options has the power, never accept the first offer, flinch, always ask for more than you expect), and sometimes it is necessary. It’s especially necessary in a business sale if the seller is in a “hostage situation” (see previous Cash In articles). But that’s not the focus here. If we’re not in a hostage situation, then we have another option and that’s a win-win. Here we focus on “enlarging the pie.” If I pay you $100,000 and it allows me to make $200,000 on top of what I paid you, then we both win. That’s a win-win. Win-Win situations always command the highest prices. In selling a business, you might create it by focusing on terms rather than selling price. You might agree to a longer payout which reduces the monthly payment and making it more “affordable” even if the total price is higher. Just visited a printer who did this very thing over 30 years ago and, yup, the buyer just made his final payment. Another thought is to reduce the initial payment so more people could play and thus support or increase the total price. Remember, terms are more important than the total price. Don’t believe me? I can afford to buy your shop for $1 million if the rate is a $1 down and $1 per year. Focus on terms not totals. Be flexible. Another way to support or get a higher price is to know that it is always more than price and earnings. Look to motive. A buyer may want to buy for status (seen this a number of times). They want to prove they are the young, dynamic and growing business hot shot who purchased the venerable home town institution. Actually sold a business on this principle myself once. And if the buyer is another printer, you will want to help focus the conversation on where duplicate costs may be eliminated to make your business even more valuable to them than it is to you. Just remember they’re not going to pay you for it. It’s just that this will increase your odds of selling at your price. Don’t forget to let the buyer see where they will command their empire, especially if they aren’t in the business now. That’s right, encourage them to sit in the big guy’s chair, feel the perks and More Ideas Receive daily email training messages as well as have access to our short (8 to 10 minute) printingspecific training classes on product knowledge and selling through the new CPrint Academy. $495 for a year’s subscription covers everyone in your shop. Go to www.cprint.com for more information. Message Tom at tom@cprint.com or reach him at (304) 541-3714, connect on Facebook and LinkedIn and follow his business tweets on Twitter @tomcrouser. MyPRINTResource.com Quick Printing | April 2015 29
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