There are tons of reasons why people prefer to buy businesses instead of starting from scratch. First, it’s more accessible, and then second, it already has a strong customer base. In this journey, we will focus on the three main types of buyers that prospective sellers would like to connect with or to have an encounter: Individual Buyers, Strategic Buyers, and Financial Buyers. Since each of these types of buyer comes with their interests and behaviors, understanding their who they are, what they do, and also their plans and motives can help you maximize the value of your business.

Business Buyer Personas: Exploring the Different Types of Potential Buyers for Your Business

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There are tons of reasons why people prefer to buy businesses instead of starting from scratch. First, it’s more accessible, and then second, it already has a strong customer base. In this journey, we will focus on the three main types of buyers that prospective sellers would like to connect with or to have an encounter: Individual Buyers, Strategic Buyers, and Financial Buyers. Since each of these types of buyer comes with their interests and behaviors, understanding their who they are, what they do, and also their plans and motives can help you maximize the value of your business.

Individual Buyers

An individual buyer is a kind of entrepreneur who is driven by a strong will to run his or her own business no matter what it takes. Most of the time, individual buyers are first-time business owners who may have management experience in a corporate environment. Numerous individual buyers are interested and concerned in working as owner-operators instead of working for a company or a business. This type of buyer will most probably have a personal interest in your product or service and will very likely to continue to run your business in much the same form. Why? This type of business buyer places a high value on infrastructures, including an excellent team of employees and owner training, because they think that these assets help the business run smoothly and effectively and it’s also a smoother transition of ownership. To maximize the value of your business, it is essential to strengthen and emphasize these aspects of your business in marketing materials and discussions with individual buyers. First-time business owners that happen to be new to your industry may also appreciate some further education and assurance about the positive qualities of your industry. It is crucial to always focus on the positive side of the business instead of the negative ones. Because this type of buyer may not have the purchasing power of financial and strategic buyers, offering some owner financing may make your business more attractive to them.

Strategic Buyers

Unlike any typical individual buyers, strategic buyers are more likely to experience business ownership or having a company of their own that already operated a similar or related business in your particular industry. This type of buyer is focusing more on purchasing your business for the reason of expanding their current business into new markets, sales, and decreasing competition, or acquiring a unique product or service that in the end will benefit them and their business. Appropriately, strategic buyers will, most of the time, transform the industry in some way as it becomes integrated with their own ideas and strategies. Customarily, this type of buyer is not primarily motivated by your business’s financial performance. Correspondingly, other aspects of your business, such as brand identity and a team of employees, are less critical when targeting strategic buyers. Since strategic buyers generally have access to capital and are interested in more than just the intrinsic value of your business, they may be willing to pay an unusually high price for your business. To market to this type of buyer, you should emphasize a valuable product or service and consider how your business’s offerings can fit into related companies.

Financial Buyers

Unlike strategic and individual buyers, financial buyers are not necessarily involved with or interested in your particular industry or product. Alternatively, a financial buyer is usually a commercial firm, such as a hedge fund or private equity firm, or a high-net-worth individual that approaches your business mainly as a financial investment that will ultimately provide a positive financial return. Since commercial buyers are predominantly concerned with the return they will get in purchasing your business as an investment, it is good to show strong earnings and potential for growth. While it is always required to have an accurate and credible financial statement of accounts in any business sale, these features will be especially essential materials to an experienced financial buyer. Understanding the main types of business buyers allows you to market your business for sale through advertising and discussions with different types of buyers. This can be a challenge for business owners who may be experienced entrepreneurs but unfamiliar with business sales. For this reason, working with a business advertiser to position your purchase with the right type of buyer is critical to your success. Business advisors like Transworld have immense experience with all of these buyer types, and they can support you throughout the selling process to get the best sale price for your business.

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