Since I take over and acquire businesses for a living, I occasionally spend time rummaging through Craigslist. (I know...I know)
You never know...I might stumble onto something great. And I like to gauge how the real seller temperature is for a city based on what people who aren't with a broker are asking for run-of-the-mill small businesses.
Against my better judgment, I responded to a very vague business listing.
They were only asking $10k and said it was bringing in $33k revenue annually but didn't have time to grow it because of other business. Yeah, this screams Craigslist scammer or wantrepreneur, but it was in Las Vegas and I planned on being there in a couple months anyway. I could at least check it out. I was thinking at the time that maybe I could automate parts of it with software and hire some sales people and get a little extra income coming in (or better if I got lucky!)
This is exactly what I sent:
exploring buying a business in Las Vegas. I'm looking for food
production businesses, however...though a good business can come from
anywhere and I keep my eyes open for opportunities. I'm also experienced
in tech/startups. Always curious to look under the hood of anything
that may be a good deal.
Tell me more about what you're selling...
All the best,
I was either expecting the usual scammer stuff or crickets. But this gem came back:
I apologize Chris but because I'm getting so many flakey responses and you don't seem like you either have the money or just fishing I won't respond to your request.
Let's make something clear: the listing was 4 sentences long. It had price, annual revenue, said that it has "no overhead" (which I know is BS), and that they weren't scamming & seriously wanted to sell this operating, profitable biz to someone. I wrote back and they were the one fishing with such little info (not even what kind of business it was) and that I would flag the listing, which I did.
Wrote me back :
Dude grow up. I have a real secure document destruction company. Most either don't have the money or they are fishing. How do I know you're serious?
Obviously I'm not doing business with this person.
There's a 90% chance I'm going to be asked to sign an NDA before any "secrets" can be revealed and I can already imagine the nightmare it will be to get to a close. So I'm 100% passing!
Later, though, I was thinking that maybe this person is just so frustrated with the crappy market on Craigslist. It had been up over 20 days no broker is likely going to do much; maybe a little advice, but that would be it. So I put on my big boy pants and offered advice to how to seriously filter through the haystack & possibly sell that little biz someday.
And now I'm passing the advice I gave on to you as well. There are serious buyers out there, but most sellers are really worried about the wrong things. And it's a buyers market.
It's a BIG buyers market.
Sellers need buyers way more than the buyers need them.
New businesses to buy are growing on trees right now!
So here's my tips if you want to sell a small, sub $100k business on Craigslist to a real buyer with the ability to complete the deal:
EVERY potential buyer is fishing. Even if they wanted
exactly the business being sold at the exact price asked in exactly the
condition it exists...there's still a chance they may not buy it. Esp
today. There are so many more biz sellers than buyers. You're going to
lose some really nice fish.
- There will always be tire-kickers. But sometimes
tire-kickers can turn into buyers when something they probably have no
control over improves. Don't let them waste your time, but don't be rude
- It's freaking Craigslist... There will be scammers and bots. Just block them and move on.
- You're getting a lot of bites but not pulling good
fish anywhere near the boat. You need more information about what you're
selling and what you're willing to do to sell it. 33k revenue is
nothing, what's the free cash flow? If it's less than 5-6k you're not
getting many serious buyers at $10k bc few ppl are paying 2x FCF for
such a tiny biz. If it's all cash only, no seller carry, say that. If
you're negotiable on price say so.
- Don't say there's "no overhead", that's a scammer
line and a serious buyer is likely going to hard pass the seriousness of
this being a hobby vs a business. Every business has overhead. 0%
operating cost businesses don't exist. 100% operating margin businesses
are very, very rare and only temporarily so.
- (This is the one that most sellers hyper-focus on and
it just makes everything difficult) There's a 99.9% chance that there's
nothing special or secret about your business. So explain to everyone
what you're selling. Tell them what's special and what warts there are.
There's a reason you feel like a big fishing expedition with nothing in
the hold...you're spooking the fish bc they're scared of what you really
are bc you haven't told them anything. Go look at some good business
listings on broker sites. The good ones list the profit margins, EBITDA,
inventory value, FF&E value, how long in business, what their
customer mix is, how much their rent is + sq footage, why they're
selling, etc. You want to attract serious buyers then you've got to be a
serious seller. Vague info, asking buyers to sign an NDA before giving
up anything; that stuff wastes more time than just putting out what
people need to know to make an offer. THEN they can deep dive due
diligence and all that. That way you know people already have 75% of the
info they need to make a decision to proceed and you'll spend 1 email
exchange max on anyone who's not serious. Anyone that needs the last 25%
of info should just make an offer already.
Aside from me making the sentence in item #6 bold, that's word for word what I sent back. I haven't heard anything at the time of this posting and I likely never will. I said "best of luck in your future endeavors" and hit send.
Maybe I'll bump into a better listing for a document destruction business for sale soon. That would be nice. Esp if I check back later and it's been taken down, which I hope means a buyer was found and reeled all the way into the boat.
So to close....I want to reiterate what I think was the most important part of this entire post:
If you want to attract serious buyers then you have to be a serious seller.