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How To Begin The Negotiation Process

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So, you’ve done your due diligence.

 

You’ve looked the seller in the eye.

 

You’ve seen the numbers, asked the awkward questions, and decided you’re ready to make an offer.

 

Now comes the part that makes most new buyers freeze.

 

How do you actually start negotiating the deal?

 

Do you send a formal letter? Do you loop in your solicitor immediately? Do you wait for the seller to name a number?

 

Let’s make it simple.

 

Here’s how to begin the negotiation process the smart way — with clarity, calm and control.

 

 

 

STEP ONE: PEOPLE BEFORE TERMS

 

Most people rush into deals trying to impress sellers with complex structures and long-winded term sheets.

 

That’s not how professionals start.

 

The first thing to assess isn’t the price or the payment plan.
It’s the people.

 

Ask yourself two questions:

 

  1. Will I make money from this business?

  2. Do I want to work with this person and their team during the transition?

If the answer to either is no, walk.

 

If both are yes, keep going.

 

Because the success of the deal relies on relationships, not just spreadsheets.

 

 

 

STEP TWO: START WITH THE BLANK PAGE METHOD

 

Here’s how experienced dealmakers avoid paralysis by analysis.

 

They use what’s called the Blank Page Start.

 

It’s not legal paperwork. It’s not binding.

 

It’s a simple one-page outline that sets the tone.

 

It might look like this:

 

"Hey [Seller], we've agreed there might be a deal here. I want to buy your business for $X amount, using Y financing, based on Z terms and conditions."

 

Write it by hand or type it up, sign it yourself, and send it across with a message like:

 

"If these terms sound good to you, let's both sign this and I’ll get it over to my solicitor to prepare the deal."

 

This signals intent without scaring the seller or locking you into anything.

 

It keeps things human and grounded.

 

And most importantly, it gets the conversation moving.

 

Tip: Only bring in lawyers once both sides have signed the blank page. Not before.

 

 

 

STEP THREE: BE THE FIRST TO SET THE PRICE RANGE

 

Traditional advice says, “Never say your number first.”

 

That’s fine for poker. It’s bad for business.

 

Here’s why it works to go first when buying small businesses:

 

  • Most sellers have never done a deal before.

  • Their expectations are based on emotion, not data.

  • They often overvalue the business because they built it from scratch.

  • If you hesitate, they’ll anchor to fantasy numbers they heard from mates or articles online.

So instead of playing games, put your range on the table.

 

Example:

 

"Most small businesses sell between 1 to 5 times their net annual profit. Based on what I’ve seen, I’d value this one between $400,000 and $500,000."

 

You’ve just done two things:

 

  • Anchored the conversation in reality.

  • Shown them you’ve done your homework.

If the seller says, “But I want a million,”

 

you’re now in a position to calmly explain why that’s unrealistic, not from opinion, but from comps, financials and logic.

 

 

 

STEP FOUR: LET THE NUMBERS DO THE TALKING

 

Remind them that price is just one part of the deal.

 

Things that affect valuation include:

 

  • Revenue consistency

  • Customer concentration

  • Lease terms

  • Staff turnover

  • Equipment age

  • Owner involvement

  • Supplier agreements

  • Seasonality

  • Risk and dependency

Make it clear that the number is not an attack.

 

It’s just the market reflecting what the business earns, what the buyer takes on, and what it will take to grow from here.

 

You’re not underpaying. You’re pricing for performance.

 

 

 

STEP FIVE: FINISH WITH CONFIDENCE AND KINDNESS

 

One last tactic. End the first negotiation conversation with a clear, respectful close.

 

Just like a great restaurant hands you a mint with the bill, you want to leave the seller with a good taste in their mouth.

 

Try something like this:

 

"I respect what you’ve built. If this business is going to keep thriving, we both need to win. I’m not here to squeeze you. I’m here to create a deal that works for both of us."

 

You may not remember your first words, but they’ll remember your last.

 

And you want to be remembered as a buyer who listens, understands and deals fairly.

 

 

 

FINAL WORD: YOU DON'T NEED TO BE A NEGOTIATION EXPERT

 

You don’t need to outsmart anyone.

 

You don’t need to wear a power suit or quote Shark Tank.

 

You just need to:

 

  • Start simple

  • Stay clear

  • Show respect

  • And let the deal structure follow the relationship, not the other way around

This is not a battle. It’s a transition.

 

You’re not taking their business. You’re carrying it forward.

 

Start that process the right way, and everything else will be smoother from here.

 

 

Your Next Step

 

Ready to find businesses that checks all you boxes?

 

Explore our current listings of Australian businesses for sale at BusinessForSale.com.au