Small Business Blog

Offer something worth buying

My sister recently sent me the following conversation, which apparently took place on a Craigslist New York community message board. Though I haven’t been able to confirm that it actually did appear, I also haven’t been able to find that it is a hoax. Regardless, it makes an excellent point.

“What am I doing wrong?
Okay, I’m tired of beating around the bush. I’m a beautiful (spectacularly beautiful) 25 year old girl. I’m articulate and classy. I’m not from New York. I’m looking to get married to a guy who makes at least half a million a year. I know how that sounds, but keep in mind that a million a year is middle class in New York City, so I don’t think I’m overreaching at all.
“Are there any guys who make 500K or more on this board? Any wives? Could you send me some tips? I dated a business man who makes average around 200 - 250. But that’s where I seem to hit a roadblock. 250,000 won’t get me to central park west. I know a woman in my yoga class who was married to an investment banker and lives in Tribeca, and she’s not as pretty as I am, nor is she a great genius. So what is she doing right? How do I get to her level?
Here are my questions specifically:
• Where do you single rich men hang out? Give me specifics- bars, restaurants, gyms
• What are you looking for in a mate? Be honest guys, you won’t hurt my feelings
• Is there an age range I should be targeting (I’m 25)?
• Why are some of the women living lavish lifestyles on the upper east side so plain? I’ve seen really ‘plain Jane’ boring types who have nothing to offer married to incredibly wealthy guys. I’ve seen drop dead gorgeous girls in singles bars in the east village. What’s the story there?
• Jobs I should look out for? Everyone knows - lawyer, investment banker, doctor. How much do those guys really make? And where do they hang out? Where do the hedge fund guys hang out?
• How you decide marriage vs. just a girlfriend? I am looking for MARRIAGE ONLY
Please hold your insults - I’m putting myself out there in an honest way. Most beautiful women are superficial; at least I’m being up front about it. I wouldn’t be searching for these kind of guys if I wasn’t able to match them - in looks, culture, sophistication, and keeping a nice home and hearth.”
An investment banker’s response:
“I read your posting with great interest and have thought meaningfully about your dilemma. I offer the following analysis of your predicament. Firstly, I’m not wasting your time, I qualify as a guy who fits your bill; that is I make more than $500K per year. That said here’s how I see it.
Your offer, from the prospective of a guy like me, is plain and simple a crappy business deal. Here’s why. Cutting through all the B.S., what you suggest is a simple trade: you bring your looks to the party and I bring my money. Fine, simple. But here’s the rub, your looks will fade and my money will likely continue into perpetuity … in fact, it is very likely that my income increases but it is an absolute certainty that you won’t be getting any more beautiful!
So, in economic terms you are a depreciating asset and I am an earning asset. Not only are you a depreciating asset, your depreciation accelerates! Let me explain, you’re 25 now and will likely stay pretty hot for the next 5 years, but less so each year. Then the fade begins in earnest. By 35 stick a fork in you!
So in Wall Street terms, we would call you a trading position, not a buy and hold…hence the rub…marriage. It doesn’t make good business sense to “buy you” (which is what you’re asking) so I’d rather lease. In case you think I’m being cruel, I would say the following. If my money were to go away, so would you, so when your beauty fades I need an out. It’s as simple as that. So a deal that makes sense is dating, not marriage.”
I couldn’t have dreamt of a more perfect comparison to illustrate selling a business. When someone gets ready to sell a business they may not use the exact words “spectacularly beautiful,” but it’s usually something very comparable rolling around inside their head. They feel their business is a golden opportunity and everyone should start forming a line now to buy it. In reality, many times this is far from the truth.

Two quick things to keep in mind: How do others view your business? What tangible assets are you selling?

It’s always important to assess what is being sold through the eyes of who is buying it. It is obvious why you think what you have to sell is a wonderful opportunity. You’ve poured hours of blood, sweat and tears into it, but what kind of filter does the owner see things through?

Getting a better perspective of how others view your business can help you assess if what you are selling is worth what you think it is or not. Consider if your building really is as nice as you think it is. Is it run down, but you never notice it because you’re used to the orange carpets and dirty walls? While the spectacularly beautiful woman thinks she’s a great purchase, the perspective of the buyer is slightly different.

If you spend 80 hours a week living in your business, you become so accustomed to it that what might normally stand out as a concern is now something that you are desensitized to. Have you ever walked into a house that smells like cat pee and wonder how anyone can stand to live there? But, if you ask the people who do live there, they aren’t even aware that their house smells. You have to become aware of your business smelling like cat pee.

Pertaining to tangible assets, service industries rely largely on personal relationships. If the relationship doesn’t transfer to the new owner, what asset have they bought? Service providers should look to improve their balance sheet by purchasing a building instead of leasing it. This is the heart of the point the investment banker makes. Her looks are going to depreciate over time. Assets like inventory, vehicles and equipment depreciate, making them worth less tomorrow than today. Assets like buildings generally appreciate over time, excluding the last 12 months perhaps. But that’s an entirely different topic.

Not only is this important from the buyer’s perspective to buy a quality asset, but in the realm of financing the purchase of your business banks prefer, if not require, a business to have a significant portion of their sale price to be made up of a tangible asset.

Finally, I’d add that the depreciation of looks isn’t what everything is about. Certainly there are other things to consider like the appreciation of a solid relationship and unconditional love. But, I have to add those things because Valentine’s Day is coming up soon, I don’t know what I’m getting my wife yet, and if I can’t come up with anything good, I’ll point to this post and show her what a true romantic I am even if my gift is lame. I’m in trouble aren’t I?

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