One of the most time consuming tasks performed by business brokers in the process of selling a business is filtering through the mass of inquiries and databases of registered buyers to find qualified prospects.

So, why does it take such a considerable amount of time in the qualifying process?

Some people may think the quantity of buyers interested in buying a certain type of business is most important. Others may think the quality of buyers is most important, regardless of quantity. But, in reality, both are very important, keeping in mind that the key word is “qualified” buyer. You need to start with quantity to get to quality.

In the interest of highlighting key factors considered in the qualifying process we utilized a simplified scenario and used national industry statistical data to help tell the following story.

Let’s assume we are selling a $1,000,000 commercial janitorial service on the north side of Houston and have a field of 100 active buyers interested in buying a B2B service company. This may seem to be an ample quantity. But in order to get to the cream of the crop, which is quality prospects, we will have to do some weeding.

First, there are many types of businesses in the service sector category, and during further discussion with interested parties and a more in-depth investigation of the subject janitorial service by these parties, you find that half of these prospects decide they want to acquire a commercial service business in other than the janitorial industry, which narrows the field to 50 prospects. Let’s further shorten the list because half of the remaining 50 prospects tell you they prefer an area other than where the janitorial enterprise is located, leaving a list of 25 possible contenders.

So, we have now narrowed prospects to those interested in specifically purchasing a commercial janitorial service in the north Houston area. If you are selling a $1,000,000 janitorial service, you need buyers who have at least $200,000 for a down payment. Of the 25 still on the list, you will find that half of these buyers thought they could buy a $1,000,000 business with less than $150,000 to invest. After quickly crossing off those who do not have the financial capability to purchase the subject business, the list has been depleted to 12 possible candidates.

Since it it very rare that a business acquisition is made without some third party financing, the remaining prospects, who have already said they had the necessary funds for a down payment, would need to have the creditworthiness to be approved by a banking institution to obtain a loan to acquire the business. Even assuming that the commercial janitorial service being offered for sale has satisfactory financial records that support the asking purchase price, half of all buyers fail to qualify because of their own personal financial circumstances. So, starting with what seemed to be a substantial quantity of 100 prospects, only six are financially capable and are looking for a commercial janitorial business in the north Houston area. This can be considered the “quality” list of buyers.

At this point, there has been a substantial amount of time and energy expended “qualifying” interested buyers. An enormous amount of effort can be wasted talking to even “qualified” prospects about a specific business who have no real intention to actually buy it or have the right temperament to pull the trigger — this group is termed “tire kickers.” Now consider the national statistic that only one in ten active buyers actually take the proverbial “leap of faith” and ever purchase a business. This means of the six left on the shortened list, there may be only one bonafide candidate that may actually purchase the business.

In a nutshell, it’s all in the numbers. You must have a large number of qualified buyers looking at a business for sale to increase the odds of closing the deal. National industry statistics already tell us that 70 percent of all businesses on the market do not get sold for various reasons. To further improve the odds, you don’t want just a large number of qualified buyers looking at your business, you want the largest number possible to create a competitive environment in order to close a deal with the highest sales price the market can bring.

Utilizing an experienced professional business brokerage firm whose only focus is selling businesses provides the environment that is required for the effort at hand. A business brokerage firm that has a prominent presence in the marketplace brings the numbers game into play. Without visibility, even the best business cannot achieve the level of exposure needed to bring enough buyers to the table. Additionally, brokers perform the time-intensive funneling and winnowing process to bring the right buyers to the arena that will further better the odds to win the numbers game. Those who have closed thousands of deals know where potential problems can arise and can help smooth the way and clear the path to the goal…the successful sale of your business.