A brilliant concept...

This is part of Norm Brodsky's monthly "Street Smarts" article that appears in Inc. magazine (this was the April 2002 issue). Mr. Brodsky was talking about the steps you need to take to sell a business. And as he did he mentioned an entrepreneur who's business was 'rehabing' and then selling businesses. Here is a part of the article that I think you will find interesting:

"Building to sell is different from building to operate. You have a different goal, and you need a whole different thought process from the one you'd use if you were planning to hold on to the company indefinitely.

I know a guy, for example, who has been very successful at building restaurants to sell. He has a regular pattern. He'll buy a failed restaurant, including licenses, facility, kitchen equipment, and other restaurant paraphernalia that the previous owners bought new. So he gets almost everything he needs at a bargain. Then he changes the restaurant's name and concept, brings in new staff, and reopens as a place for fine dining, charging very reasonable prices.

That's his trademark: excellent food at low prices. The city newspaper rates restaurants. This guy's places are the only ones in their category that are rated excellent with two dollar signs (moderate pricing). The other excellent-rated restaurants all have four dollar signs (expensive). Not surprisingly, his places are packed.

So why doesn't he charge as much as his competitors? Because his goal is different from theirs. He's building to sell, and he has his own formula for doing it. He knows he'll find a buyer -- and get the price he wants -- if he can show high sales volume and great potential for increasing profits. After all, the new owners can raise the prices on the menu to the competitors' level.

Granted, the founder could do the same thing and probably make more money while he still owns the place. But he has figured out that he can earn a better return in the long run by keeping his prices low, building up sales volume, and selling the business at a premium price."

An absolutely brilliant concept...and it shows what a little 'outside the box' thinking can do for you.

Now you are probably thinking..."hey that guy has tons of money to do that and I don't."

This concept can work for any business...take flower shops for instance. I know many can be purchased for a song. Then you do the same thing. Make it efficient, low priced, crank up the sale's volume and then sell it.

I'm sure there are many non-traditional businesses you could do the same thing with. But anyway, the concept is solid.

Take care,

Mike Winicki