“Can we stop in here? I was talking with the owner the other day, and he told me he wanted to talk with you about selling his business.” My wife, Emily (her real name), and I were out for dinner one evening. As we walked into one of our favorite restaurants in Brentwood, she told me she had visited a nearby boutique just a few days earlier. She said she started talking with the proprietor of the boutique, and he told her he was trying to sell the business. When she told him what I did for a living, he said, “I want to meet that guy.”
Emily was happy to make the introduction, though I wasn’t thrilled about it. I don’t know the first thing about selling a small retail business. Look up “business broker” in the Yellow Pages and call one of those guys. But I do know this much, a business like this boutique has little transferable value beyond the discounted value of its inventory.
Emily’s story about her conversation with the owner confirmed my thinking. He told her he had to be in the store six days a week because he couldn’t “find good help.” That phrase usually implies, “We don’t pay well” or “People don’t like to work here.” But I digress. Emily went on to tell me the owner told her his business was being killed by online retailers. He said, “I could make better money if I sold this stuff online from my home basement. At least I’d save myself the rent.”
Emily thought I was being insensitive when I said I couldn’t help the guy. But I explained to her the reality that the business world has changed and this guy was probably too late to figure it out. I told her no one can hardly make any money playing the storefront retail game, and even if they are eking out a living, they aren’t creating transferable value. I said it this way, “This guy doesn’t actually own a business, he just owns a job.”
Owning a job is not a bad thing, if you like your job. But if your “job” is something that will sooner than later be obsolete, like storefront retail, you are in big trouble if you are counting on selling it for meaningful value.
JIM CUMBEE is President of Tennessee Valley Group, Inc. a retainer-based business brokerage and transition mediation firm in Franklin, TN. Cumbee is an attorney and has an MBA from Harvard Business School. Jim is the author of Home Run, A Pro’s Guide to Selling a Business. https://www.amazon.com/Home-Pros-Guide-Selling-Business/dp/1599329239 . He has a wide range of corporate and entrepreneurial experiences that make him one of the most sought-after business transition advisors in the state of Tennessee. The story above is true, but the names and fact patterns above have been changed to preserve the parties’ identities.
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