If you’re looking to buy a business, a business sale by owner can be a great way to avoid competition and increase your chances of finding a great deal.
With that said, finding businesses for sale by owner can be challenging.
My aim with this post is to demystify the process: we’ll cover 12 ways to find motivated sellers and cover exactly what to do next.
From online resources to networking opportunities, there are plenty of ways to connect with potential sellers and create quality deal flow.
Let’s dig in.
Business Sale by Owner: Focus on Motivated Sellers for Deal Flow
Once you’ve nailed down your acquisition criteria and developed an M&A strategy, the next step is to create a pipeline of specific businesses to target.
I’d recommend focusing solely on off-market deals with motivated sellers, which will give you an advantage over other buyers who are looking at businesses that are publicly listed.
There are a few reasons for this:
- You’ll avoid competing with other buyers: the best deals are typically not found where everyone else is looking
- The seller may be more negotiable on price since they’re not working with a broker
- As the business buyer, you have more control over the process
Why focus on motivated sellers?
The answer is simple: because they’re more likely to sell.
Think about it from the seller’s perspective. A motivated seller is someone who needs to sell for a specific reason. This could be because they’re retiring, relocating, or facing financial difficulties. In any case, motivated sellers are more likely to be willing to negotiate on price and terms.
On the other hand, a seller who isn’t motivated may not be as negotiable. They could be attached to their business or simply not in a hurry to sell.
Why would someone be a motivated seller?
Here are just a handful of potential reasons why someone could be highly motivated to sell their business:
- Financial problems
- Planning to close down
- Burnout
- Relocation
- Falling out with business partner
- Changes to industry
- Retirement
- Health problems
- Desire to pursue other opportunities
- Open litigation
- Cashing out on upcycle
You won’t immediately know if someone is a motivated seller, so it’s critical to get out there and have lots of conversations with business owners.
This is a numbers game and requires patience, but remember: the quality of your deal flow is more important than the quantity.
It’s better to have a handful of high-quality, off-market deals that you’re seriously considering than a long list of businesses that may not be the right fit.
12 Ways to Find Motivated Sellers
1. Friends and Family
The first place you should look for a motivated seller is among your friends and family.
Let people know you are interesting in buying a business and ask if anyone knows of a business that might be up for sale. This is low-hanging fruit, you may be surprised by how many people know of businesses that are looking to sell.
2. Small Business Development Centers
Small Business Development Centers provide counseling and training for small business owners. These are everywhere – you’ll find hundreds over the US.
You can attend their events and use that as an avenue to meet local business owners within your area.
3. Chamber of Commerce
Your local Chamber of Commerce is a great networking opportunity. You can attend their events, or simply go to their website and look for a directory of businesses in your area.
There are also online directories that list businesses by chamber of commerce membership.
4. SCORE
SCORE is a a national nonprofit that provides free mentoring and advice to small business owners.
They have chapters all over the US. You can attend their events to connect with local business owners.
5. Country Clubs
Country clubs are a great place to network because they attract a lot of influential and wealthy business owners.
If you can’t afford to join a country club, try attending one of their events as a guest.
6. Affinity Groups for Business Owners
There are numerous affinity groups for business owners. These are groups of like-minded individuals who meet regularly to discuss business-related topics.
Some of these groups include the Young Presidents Organization, Tiger 21, and Vistage International.
You can find a group in your area by doing a quick Google search.
7. Trade Associations
Another avenue for finding motivated sellers is to look into trade associations. Trade associations are groups of businesses that operate within a specific industry.
For example, the National Retail Federation is a trade association that represents retailers in the US.
You can find trade associations by doing a quick Google search or visiting USA.gov’s trade association directory.
8. LinkedIn and Facebook Groups
Both LinkedIn are Facebooks are great platforms for networking and connecting with potential business sellers. There are numerous groups dedicated to business owners and entrepreneurs.
You can use the search function to find groups in your local geography or industry of interest. Once you’re a member of a group, you can start having conversations with potential business sellers.
9. Local Community Events
Get to know your neighbors and local community, you’d be surprised on how many are business owners.
Attend local events, such as town hall meetings, rotary clubs, business-related meet ups, charity functions, and business expos.
This is a great way to get your foot in the door and start networking.
10. Financial Planners
Financial planners work with individuals and businesses to help them reach their financial goals.
Their clients are typically business owners who are nearing retirement age. This makes them a great avenue for finding motivated sellers.
You can find financial planners in your area by using the National Association of Personal Financial Advisors (NAPFA) directory.
11. Contacts in Your Existing Business
If you own a business already, your existing contacts can be a great source of leads for motivated sellers.
Let the below folks know what you’re looking for – this can help you cast a wide net and expand your pool of potential opportunities.
- Competitors
- Suppliers
- Distributors
- Customers
- Employees
12. Direct Mail
A great old-school method to find motivated sellers is to send them direct mail. You can compile a list of potential sellers using public records and data lists. Often your public library will have access to these lists.
Once you have a list, you can start sending out letters, postcards, or even personal visits to try and get a conversation going.
There are numerous lead generation companies that specialize in direct mail. You can use their services to help you compile a list and design your marketing materials. We’ll dig into how to implement this strategy below.
Having Trouble Finding a Business Owner?
If you’re struggling to find the owner of a specific business, here a few ways to uncover it:
- Check SecStates.com (business information filed with state)
- Search LinkedIn
- Search ZoomInfo.com
- Search D&B Hoovers
- Google search (include your city/state): business permits
- Google search (include your city/state): business licenses
- Google search (include your city/state): certificate of occupancy
Outreach Strategies: How To Get in Touch
Once you’ve identified some specific companies that you’re interested in, you can reach out and begin a conversation.
In a perfect world, the ideal way for you to connect is to get a warm introduction. This is when you have a mutual connection who can introduce you to the business owner. If this isn’t possible, you’ll have to reach out cold.
You have a few options to reach out: email, phone, writing a letter, or reaching out on LinkedIn/social media.
As I mentioned earlier, this is a numbers game…with whichever option you pick, you’ll want to focus on high volume outreach so you can build a pipeline of motivated sellers.
What Should I Say in My Message?
When reaching out, here are a few key things to remember:
- Keep it short and sweet: no need to get too detailed or tell your life story
- Keep it focused on the business owner and speak to what they care about: their employees, customers, reputation and legacy, a strong succession plan, retirement/next chapter of their lives, and spending more time with family
- Be friendly and professional: this is the beginning of a relationship
- If you are local in the community, I’d recommend emphasizing this in your communication (can often give you an advantage over purely financially oriented buyers)
- Include a call to action: “you can reach me directly via phone/email”
My recommendation is to focus on two outreach strategies: Direct Mail and LinkedIn Sales Navigator.
1. Direct Mail
In today’s age of technology, direct mail is an underrated strategy which increases the likelihood of your message being read by the owner/decision maker (instead of ending up in an email folder with hundreds of other messages).
Recommendations for best results:
- Handwrite address information on the envelopes (or have a print shop use a handwritten type font)
- If possible, add a stamp for “Personal & Confidential” as seen in the example above
- Keep your letter to 1 page or less
- For return address, include your street address (but not your name) for intrigue and curiosity
- Mailing one letter will not typically work: this needs to be a multi-step campaign to be effective (i.e. send 5 letters in a sequence).
- You can use the same exact letter or create slight variations (don’t worry about sending the same version multiple times)
- Hire a mail shop to send out these letters every 14 weeks for a period of time
This process does require a budget (typically ~$1/per letter sent) with a mail shop, but if you’re serious, I think you’ll find it worth it.
Mailing letters has a great advantage, because the business owner ends up being the one reaching out to you.
This gives you leverage within the relationship, as they are raising their hand to say they are potentially interested in selling their business.
2. LinkedIn Sales Navigator
If you can’t afford the direct mail approach, LinkedIn is another solid option.
You’ll likely find that LinkedIn messages via Sales Navigator has much higher response rate compared to cold emails or calls. You can replicate the same script used for direct mail letters.
Implement to Increase Your Deal Flow
These are just a few ideas to get you started. The most important thing is to get out there and start networking with potential business sellers. The more people you meet, the better your chances of finding a motivated seller.
Don’t be afraid to think outside the box – there are many motivated sellers who are not actively looking to sell their business, but would be open to the idea if presented with the right opportunity.
If you keep your eyes and ears open, you’ll be sure to find plenty of motivated sellers in your area. I’d love to hear how these strategies work for you – feel free to leave me a message in the comments.
