Good Information here Bill - it definitely sounds like this might be one of your niches.

John Occhi, Hemet REALTOR
Mission Grove Realty

Thanks John.

We'll see how many others like it too.

But I will continue with the series because these are my clients that I am talking to.

Bill Roberts

This is great information for the public eye Bill.  These tips are very important.  Everyone can learn from this blog.  Thank you for posting it.

Hi Nicolette, now that you are on board I will continue this series. Thank you.

Bill Roberts

My pleasure.  This information is very valuable even if it is not highly recognized yet...

Very good post, Bill. I'd definitely recommend continuing the series. Your stuff is good enough to put into an EZineArticles.com type of site. Just put more of a business owner/consumer spin on your articles, and I think you'd do very well. I use EZineArticles, and if nothing else, it'll pump up your presence in Google searches.

Hi Bob, thanks for the information. I will check it out.

Bill Roberts

4 things I ask for are: 1) Copy of the Lease.  If there's no lease left this will tell you how much work you have or don't have coming your way for negotiation of a new lease & the sale of the business.  I also look for demolition clauses and termination clauses if the building sells too. 2) Equipment List aka F.F.&E (Furniture, Fixtures, & Equipment) 3) P&L statement 4) Fill out the listing agreement information form for the MLS.  This makes your job easier to when listing since the form will already be filled out & so will the listing comments.

Sales is a numbers game & pricing a biz opp isn't an exact science which is why I'll take an over-priced biz opp listing (not an over-priced residential home listing).  Everything sells based on price & the buyers determine the sales price.

Nathaniel, I appreciate your digging up this old post, but I have to say that your methods are the methods of house sellers trying to be business brokers. It just doesn't work. I don't know how else I can say it, the P&L means nothing. An over-priced business opportunity is even deader than an over-priced house. And lastly, businesses SHOULD NEVER be exposed on the MLS. Sorry, but that's how it is.

If your client wants you to sell his business, do him a favor and refer it to an actual business broker.

Bill Roberts

BTW I just read your profile. You should know what I'm talking about. I can't believe that business sales are that different in Seattle than they are elsewhere. But welcome to ActiveRain. Maybe we'll be able to continue this discussion.

I primarily sell restaurants.  I was a former restaurateur that built a successful restaurant from scratch & I can typically get a hard liquor license in place within a month (obvious liquor licensing differs from state to state, but it typically takes 90 days in Washington), which means we can close on the sale of the business and get paid.  I provide a lot of expertise for my clients that want to open a restaurant having been a restaurateur.  When selling a restaurant, sure one can talk numbers (make up a pro-forma), but dealing with the health department, liquor licensing, city & state codes are many things involved when selling a restaurant.

In order to sell a business opportunity one must know business & understand commercial leases. In Washington state a business broker need not be licensed as a real estate agent if there is no sale of real estate involved, but negotiation of a lease is another thing.  Yes, a P&L means nothing & so does a pro-forma made up by the business broker.  I've heard 1.5 to 2x to 3x net when selling a business & that means nothing too.  Ultimately it's the buyer that decides the final price.  I've seen businesses double within weeks of a management change, as well as, drop in half, so how did the pro-forma info or P&L help them?  P&L is more of a guide/map of what's going on & most of the P&L's I deal with are fabricated junk anyways if they deal with a lot of cash.

How real estate agents that sell biz opps differ from pure business brokers (that aren't licensed real estate agents) is that they can legally deal with the real property part (real estate & leases) and that they are part of the mls which gives more exposure to the sale of the business.  Also, real estate agents co-broke with other agents, meaning other agents can sell it and get paid half of the commission, just like on a standard residential/commercial real estate sale.   In Washington state, the non-real estate agent business brokers take a listing and don't expose the listing to the market other than in scatter ads in the classifieds;  since they are the only ones that know about the sale of the business and don't co-broke means they keep all the commission and are the only ones that can sell it.  My fiduciary responsibility is to get the seller as much money as possible and to expose the business to as many qualified buyers as possible without jeopardizing the current business, so many times the business is listed as "undisclosed" requiring a non-disclosure agreement in the mls.  I beg to differ that placing a business in the MLS and exposing it to the market is detrimental to the sale of the business.

Nathaniel, I feel that we have lots of areas of agreement. The skill of the agent is in shepherding the transaction through escrow. What you know about restaurants and liquor licenses is definitely a Unique Selling Proposition. I commend you.

In California business brokers must be licensed real estate brokers or attorneys. If the business doesn't involve any real estate (owned or leased) it might be argued that it is exempt from this law, but it also could be argued that it isn't really a business because most businesses need to be somewhere.

Most business brokers here don't co-op because it is felt that an inexperienced agent can only harm a transaction not help it. When 9 put of 10 sales sales made by the owner fail to close escrow it becomes obvious that the real work comes after a buyer is identified. Just bringing a buyer to the table doesn't qualify as anything worth half of the commission. Most of us will pay a referral fee but not co-op.

Exposing a business on the MLS leads to problems for the business owner. Emplyees get nervous. Customers find out the business is for sale. Inexperienced agents send prospective buyers into the business place without proper vetting or supervision. Some of these prospects (suspects?) cause a lot of grief for the business owner.

Most of these "lessons" have been learned the hard way.

I want to thank you for resurrecting this post. I decided to rewrite it and repost it. Thank you.

How To Sell A Business, A Reprise

I would like to meet you. I hope I haven't put you off by my attitudes.

Bill Roberts                          

I understand your p.o.v. & I'm not put off by your frankness.  Your entitled to your opinion.  You've earned it from having many more years in the business than I do.  I partly agree with you on the point that MOST residential real estate agents shouldn't be selling business opportunities because they do the seller a disservice and that is they need to know to read P&L's, how a business runs, and commercial leases. Usually, if all they do is sell houses, then there is nothing that carries over from that experience into selling business opportunities, especially when it comes to negotiating a commercial lease.

I don't agree in the not wanting to co-broke due to the chance that an inexperienced agent might be involved.  I just call it greed.  I would rather have 50% of something rather than 100% of nothing.  Yes, many times the other agent doesn't have a clue, but they are the source of the qualified buyer (Majority of my biz opp sales in 2007 I double-ended).  So what if I have to take the reigns on the whole transaction, at least I get paid.  I'm closing on a sale tomorrow where the buyer is a residential agent, but he wanted me to keep 80% of the commission due to my experience & work on getting the transaction closed.  While representing the seller, I helped the buyer set up his LLC, fill out the liquor license application, show him where to get his food handler's permit, liquor server's permit, where to get insurance, & negotiate with the landlord on a new lease and dissolving the current one.  I have a 90% conversion rate when going on a biz opp listing appointment, meaning I get the listing.  I tell them difference between listing with a non-licensed real estate agent/business broker & a licensed commercial real estate agent that sells biz opps and show them my Plan Of Action to get a business sold & they usually list with me.

Most of my business opportunity listings are by referral.  I consult on liquor licenses separately (if I'm not getting paid on the lease or on the sale of the business) because everyday a restaurant doesn't have a liquor license is money lost and customers don't come back until one is in place or one can't close on the sale which means I don't get paid.  I differentiate myself from others because of my personal hands on experience as a restaurateur.  Being a manager of a business is not the same as owning a business.  I've sold many businesses & have listings where this is the case.  I was selling biz opps before I opened my first restaurant, got out due to my inability to work together with my partner, but I've parlayed that experience into a reputation as an expert in restaurant sales in Seattle.  If one hasn't been a restaurateur then they can never fully understand the restaurant business and all that lies ahead. 

I'll be in San Diego, Jan 21-23 for the Mike Ferry One-On-One Coaching Retreat so if you're in the San Diego area during that time we can meet.  Yes, I pay a coach $1,000/month to keep me on my game & constantly improve my skills just like Tiger Woods does. 

Nathaniel, I will make myself available Jan21-23 to fit your schedule. Give me a call or shoot me an email.

And again, Welcome to ActiveRain. Post about your experiences. We all have a lot to learn from you.

Bill Roberts

BTW Your "split" with the inexperienced agent gave him even less than my referral fee would have.