17 Sep The Old Pro Deals with the Down Payment
Many of our readers know about the Old Pro – my mentor, friend and father-in-law. For those who haven’t read any of my columns titled The Old Pro read-on.
The “Old Pro” columns were written in the late 1980s and were based on our experiences in the middle 60s. This is not, obviously, new material. I have done this because I think they provide a different viewpoint of the material discussed, or an amplification of it. And, quite frankly, the fundamentals are the fundamentals. We feel strongly that much of what the Old Pro espoused is still pertinent.
Although I wrote the “Old Pro” columns, they reflect the thoughts and viewpoint of my mentor, G. R. (Russ) Wright. I subsequently married his daughter, who now works with me. She was very quick to point out when I would write something not quite the way her father would have phrased it by saying, “My father wouldn’t have said that.” My highest compliments are from those who knew the Old Pro and agree that he was just the way I describe him in the column and that I have captured the essence of what he would have said in exactly the way he would have said it—with only a slight exaggeration. I also feel that these columns add the important human aspect of the business, and that the knowledge imparted is as relevant today as it was years ago. Russ died in 1990.
Although the Old Pro represents business brokerage past, much of what he preached is timeless. We have asked this question to several veteran business brokers who knew him: “If the Old Pro were in the business today, how would he do?” They all said he would be successful—and we think they’re right. The basics of almost anything are timeless!
The Old Pro Deals with the Down Payment
As good as we think we are and as well as we feel we have learned our “lessons,” there comes a time when outside help is needed. It’s not often that we call on the Old Pro – directly – for help, but it was time!
The listings were coming in and so were the buyers. We were sure we knew what the problem was – we had been complaining about it for weeks, with no results. For some reason, our staff was listening to us, but not hearing us. We knew the Old Pro had a way of putting things that got results. So we called the Old Pro, asked him to have an early breakfast with us so we could explain our problem. After breakfast he would talk to our staff. They knew we had a meeting scheduled and we had also told them that the Old Pro wanted to talk to them for an hour. They knew as we did that the Old Pro just got started in an hour. But, they also knew that it would be a provocative, interesting and informative session.
At breakfast we explained to the Old Pro that the number of listings was good, but very few of them had a decent down payment. It was best to talk to the Old Pro while he was eating, because once he was done he would take over – or so we thought.
We continued explaining our problem to the Old Pro and we told him that we had been telling our staff about the down payment problem, but with no results. The Old Pro was now finished with his breakfast and was sipping his coffee – and we were still talking – and he was still listening. He finished his coffee – got up from the table and said, “Let’s go to work!” We knew then that the staff was going to have an interesting morning. The Old Pro entered the meeting room and after a quick “Good Morning,” said, “I understand you’re having problems getting reasonable down payments?”
“The biggest obstacle in getting that reasonable down payment is fear. Your fear to fight for it and the seller’s fear that he might have to take the business back. Your fears, you have to handle. The seller’s fear is the one that takes the effort.
“You have to convince the seller that if the new buyer gets in trouble, and that’s the seller’s big fear, the buyer will just turn around and sell the business again – hopefully through you and your office. And if that happens it’s usually possible for the seller to get any back payments and a new buyer can continue to meet the payment schedule.”
The Old Pro was really into the subject now– and, as usual, we weren’t surprised. “After all, the new buyer wants to recover part of his down payment, too,” the Old Pro continued.
One of our sales staff, a new one obviously, interrupted the Old Pro and asked, “But, what happens if the seller asks what is he supposed to do if the guy just doesn’t make it?”
The Old Pro appeared annoyed at the interruption, but gently pointed out to the staff member, “Well, then the seller has two choices. He can take the business back and resell it and hope to make a few bucks. The other choice is that the seller will have to sell a closed business. And, hopefully, in both cases, he will call on you to do that job. But, it’s important that you point out that very few buyers walk away. Ask the seller to call you if the payment is late. That way you could call on the new owner to see if everything is OK.”
The Old Pro, as usual, was giving it to them straight. “Remember, you have to have agreement that most purchasers of big ticket items are financed. Houses, cars, you name them, can be bought with 20 percent down, sometimes less. I know, I know, the seller is going to tell you that outside financing is used, but he also knows that there isn’t any for his business. The seller has to know that to get the best buyer exposure possible he has to offer terms. No terms – no sale. The percentage of businesses sold on an all cash basis is less than 5 percent.”
We knew the Old Pro would keep on going and the phones were now ringing and buyers were waiting. The Old Pro sensed our uneasiness and he wound things down by telling the sales staff to make a personal visit to every seller they had, and talk to the seller about the down payment. And his last words before letting the group go were “…and take plenty of listing amendment forms with you!”
