Some things just torture me. And a recent article in the Mammoth Times about a new business for sale just irked me. I just really have to ask myself how this came about? This was a gross disservice to these owners and potential sellers. What were the editors thinking? I’m criticized for being candid to a fault, but this was abusive. And where was the broker who represents them? Why didn’t he take control? In a small town, this is almost irresponsible journalism. In the era of Wally Hofmann this article would have been re-written because the flaws so glaring.
Every couple of years the subject of business and businesses for sale in Mammoth is a worthy topic for a column. I’ve had my share of business listings over the years and thankfully my professional insurance (known as Errors & Omissions) now prohibits me from listing them unless there is real estate involved. That makes me happy for my sake, and the sake of my associates. Quite frankly, small business listings are a pain in the ass for many reasons. But trying to help someone who is miserable is an honorable duty, at least for the first year.
So now to the subject. A couple of weeks ago the aforementioned publication runs an article about a new business for sale. I had seen the sign in the window and received a flyer from the broker (who isn’t a member of the local MLS). The event was no surprise and actually quite predictable. How many times have I seen this before and eventually become part of it? But here comes the obligatory press release in the local paper. The seller boldly announces, “I’ve had enough” immediately after the who, what, when and where paragraph. Reminds me of Roberto Duran uttering “no mas” in the boxing ring with Sugar Ray. The beating has obviously been had.
Now I can just imagine marketing a piece of property for one of my sellers this way. For Sale, this nice 3 bedroom and 2 bath home. The seller has “had enough” of frozen and broken pipes, the leaking roof and the bear invasions. But you Mr. Buyer should take great interest in it, and in fact should grossly overpay for it.
The article says the current owners hope the new owners (by-the-way, hope is not a good business strategy) keep the business “much as it is.”
“We’re going to encourage whomever buys it to not really change it. Because it’s not broken, it doesn’t need fixing…” Damn, I’m going to use that strategy with my buyers. Look Mr. Buyer, the current owner has “had enough” with all the problems but you should buy the property, and even better, you really shouldn’t even bother fixing any of these concerns because you can live with it until you’ve “had enough.”
The article goes even further to extol the features and benefits of owning this business: “In the past…she has been challenged in finding employees who are willing to work, and thus has experienced frustrating turnover…and quote ‘they don’t want to work for their paycheck.’”
And even more appealing, everyone was recently laid off because there is no money to “pay employee salaries and pay the lease, the utilities, taxes, worker’s compensation, the liability–––all the things that go with owning a business.”
Further the owner states that these aren’t the real reason for wanting to sell, it’s now about “restructuring her life to create more free time and not work six or seven days a week.” Wow, these are just more great selling points. I’m surprised there isn’t a long line of ready, willing, and able buyers just fighting with one another to buy this business.
I feel really bad for these owners/sellers. The Mammoth Times really kicked them to the gutter. Hopefully the article is not online where some potential buyer gets a look at it. This is not the way to start the marketing campaign. The article is a classic WTF moment. Did anybody have a clue here? I wonder if anybody thought it was a good idea to make re-prints of the article for marketing purposes? I hope not. Time, and the market, will speak to whether there is a buyer and at what price––and how motivated the seller becomes to walk away. After all, she’s “had enough.” When I first moved to Mammoth I was told there was an 11th Commandment in Mammoth: Don’t Set Yourself Up For Disappointment. True for life in general, but a very important one when trying to sell a business.
Sometimes I’ve had to tell people their business has no value, or close to no value. In the early 90’s I marketed a very popular restaurant here in Mammoth and after enough time and effort the seller settled for a price around the cost of a new Honda Accord. The buyer changed the whole concept and became a seller just two years later and eventually just folded. There isn’t even a restaurant in that lease space today. In 2003 I was fired from the listing of a famous sports bar. I was telling the owner the asking price was far too high. He told me that he needed another broker, one “who could think outside the box.” The For Sale sign is still out in front and I’m reminded every day when I drive by. And over 20 years ago I had a firewood company listed for sale. The work was too hard according to the owner. Well, now the company is bigger than ever and he’s married to one of my real estate competitors.
I hate to tell these new “sellers” of Mammoth Times infamy that just because they put the for sale sign in the window doesn’t mean there is a buyer, and definitely not with such a great marketing strategy. I think somebody has given them false hope. My bet is that if someone were looking, they simply plan to negotiate with the landlord. They’re called vultures, and vultures don’t pay for blue sky.
As a sidebar, recent property tax appeal hearings here in Mono County have highlighted the taxing cost of improvements, especially interior improvements, on a business. These can impact both owner occupied and leasehold properties. These taxes can rapidly erode a profit margin and few business owners consider them in business planning. For example, one restaurant and bar in the Village has almost two million dollars in interior improvements. The personal property tax on those improvements runs about $1500 per month. That is above and beyond rent, common area charges, utilities, etc. My junky old office furniture that depreciated out years ago looks better all the time.
Meanwhile, the precipitation of the last 36 hours here in Mammoth bodes for a wonderful winter ahead. So when you come to Mammoth this winter, please spend a little money in town at your favorite spot. It will be a small insurance payment that it will still be business the next time you come to town. Now back to business.