Do Business Well

I had no idea how much most people hate haggling. Negotiating a deal does not come naturally. All too often a purchase is not really negotiated at all. This means that if you do your homework on the deal and if you then apply some simple principles, you will put yourself at a considerable advantage over most vendors.

The information-gathering about the liquidation

This is your first visit to the shop when you view the premises and find out as much as you can about the way it trades, what it sells, how much it sells, the terms of any lease, past profits etc. You should also try to find out why the vendor wants to sell. This can be very important. Are his stated reasons the real ones and can you exploit them to your advantage?

The ‘What is the liquidation deal?’

Here, the problem is to find out precisely what the vendor is prepared to offer. You should not yet have made a bid. You are merely clarifying his asking price. The agent’s particulars may quote a figure, but when you actually ask the vendor how much he wants, he may give you a different, lower figure or he may indicate that the one quoted is ‘negotiable’. If he does either, you have won an immediate point, while conceding nothing yourself. You have established that you can definitely do a deal at a lower figure and the third stage will be a question of how much. Meanwhile, you are still not making an offer – you are trying to find out what associated terms the vendor is prepared to give you ‘on a plate’, ie without your having to negotiate for them. The vendor may well be prepared to make various concessions which are not related to the actual price, but which are nevertheless worth money to you. For example, he may offer to work with you in the business, preferably before you take it over, for perhaps a couple of weeks. Another is the question of stocks. Normally he will want you to take over everything in the shop but, particularly with some specialist items, it is always possible that he will be prepared to take these with him. Perhaps he would accept a delayed payment for the business, say 50 per cent down and the balance over a year or even longer, or maybe he will take with him items of equipment which you do not want, thus reducing the price.

In practice, there is limited scope for such concessions in the sale of a small shop, but it is always worth looking for them. Remember that at this stage you are not yet negotiating. You are simply asking him exactly what the deal is which he is prepared to offer you. Obviously, you are interested or you would not be asking the questions.

Ideally you should make three visits to the premises, each visit being a separate stage. Of course, this is not always practicable – there may be other parties on the point of making an offer.

I think it is impossible to make the best deal after a single visit, even if you go through the three stages as distinct processes. You are making an instant decision if you make an offer on your first visit, and this is not advisable.

A second visit is always invaluable because of the things you will spot which you did not notice on your first visit. You will be astonished at how unobservant you appear to have been. Partly, of course, this is the result of some natural excitement at seeing a place which might be suitable. The first time round, inevitably, you will tend to see the good points rather than the bad and to have ’stars in your eyes’.

Choosing a business is a very important decision which requires careful consideration and a second look, at least.

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