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People overvalue what they have |
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Behavioral Economics for Entrepreneurs
By Scott Shane, posted on www.smallbiztrends.com
There’s a wonderful new book out called Predictably Irrational by Dan Ariely that points out many interesting findings from behavioral economics that help to explain why people behave the way that they do.
The book offers a lot of useful insights for anyone who runs their own business.
Particularly important for people engaged in buying or selling a business is the finding that:
People overvalue what they have. Ariely points out that people who have something consider it to be much more valuable than people who don’t have it. This point explains why it’s so hard to get a business buyer to offer you a price for your company that you think reflects its worth and why it is difficult to get an investor to value your business at what you think it is worth.
Synapsis Comment: There is only one way to bridge the gap between the differences in perception and behavior so evident between a buyer and a seller: Hire á professional who can see things from both ends, identify the value drivers of the business and arrive at a probable price that makes sense to both parties. This exact service, indispensable to a successful business sale, we offer to our clients. Contact us for more information.
For the complete article go to:
http://www.smallbiztrends.com/2008/06/behavioral-economics-for-entrepreneurs.html/
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