OPEN LISTINGS DESTROY VALUE!
This morning I got a call from a lady trying to sell her small sandwich shop. She said she had signed a listing whereby she only pays a commission if the broker brings the buyer.
So I went through and asked her questions about her business. The rent was low at $1,200 a month. It was a 5 day shop. It had one employee. Husband and wife worked it. They hadn't been in the business before and didn't work the catering side at all. Sales were only $8,000 a month, but they were making some money. The landlord was willing to do a new lease and possible at a lower rent rate.
So I told her that the company taking the open listing has no incentive to truly sell your business and in fact they are destroying value. She asked why. I said because they didn't do any investigatory work on your business. They throw an ad out on to BizBuySell that is void of any context of your business. They now nothing about your business in order to truly sell it. They use the shot-gun approach to brokering business. And when a buyer see your ad, they will look deeper and since the broker knows little about the business, they will get a bad impression and never return to look again. That's a lost opportunity to get a good price for your business. That's lost value.
So hire a broker who does the research and preperatory work and writes good ads that draws buyers in. So I looked up the ad on BizBuySell and here is what they wrote:
"Business Description
NICE, EASY BREAKFAST & LUNCH THAT HAS BEEN IN BUSINESS SINCE 1990. 5-DAY EASY HOURS. NEW OWNER SHOULD KNOW HOW TO MARKET. PUSH CATERING TO BRING IN MORE CASH FLOW. FOR MORE INFO CALL GOLDSTAR BUSINESS BROKERS AT..."
Not very good at all.
So when you think you're getting a great deal when a broker says "sign here, no obligation, if you bring the buyer, you pay no commission!"
Well you just lost more value than any commission would have cost you! Think again!
Mel Jones is one of the premier restaurant brokers in the nation having published hundreds of articles on buying and selling a restaurant and bar business, selling thousands of restaurants in CA., WA and AZ and building one of the most copied business models in the brokerage industry. Mel started SellingRestaurants in 2004 with the one simple concept, give the buyers the information they need to make intelligent buying decisions without being pestered by a broker or hiding information, prepare the business for market by researching key details that make or break deals and educate the buyer on the buying process to create an intelligent buyer. Prior to SellingRestaurants, Mel was a Chief Financial Officer for Universal Music Group, the largest music company in the world. There he participated in more than $11.5 billion of merger and acquisition transactions. He also work for top companies such as Nestle Foods, USA. He hold a Bachelors in Business Administration Finance as well as attened Law School at Gonzaga University. Give Mel a call at 480.274.7000 or e-mail him at [email protected] if you have any questions.