19 Nov Industry Survey Comparisons
Many of our readers are familiar with our annual survey. Those of you who filled out the questionnaire for the 2013 survey have already received your complimentary copy. Many of the responses are quite interesting and informative. We will be printing some of the questions and responses, and adding our comments to them. What we have done is returned to previous surveys going back to 1978. In those days we had someone collect and process the data from our 50 + offices. We don’t mean to bring up the past, but some of the comparisons are interesting.
The following are issues we have discussed before, but they are still very important and critical to success.
Quantity of Listings
Lets start with the number of listings in an office. (We will consider a sole practitioner as having an “office” regardless of where it is.)
In 1978, our average office had at least 6 agents. Each office was managed by either an additional manager or, in some cases, by one of the six agents. Most of our managers were in production also and worked on an override of the office sales.
In 1992 our offices got, on average, 19 new listings per month; 28% of the offices got 25 new listings per month. In 1992 the average agent got 10 new listings per year.
In 2012, each office had 34 listings at the end of the year. In 2013, each office had 35 listings at the end of the year.
The offices in 1992 had over 200 listings at the end of year based on an average 120-day listing period.
This obviously begs the question, “But what about quality?” Did the offices in 1992 take bad listings? Sure, some were and no doubt the listings taken today are better priced, etc. In 1992, there was little, if any, outside financing, so the down payment was more of a consideration than the full price.
What are the pluses of lots of listings?
More variety for buyers to see AND more comparisons
There is an old adage that a large percentage of buyers buy a business completely different than what they asked about initially. I can tell you from years of experience that what a business buyer likes and what a businesses buyers buys is completely different than what I would have predicted. What we think is a great business may not be what the buyer thinks is a good business. I also believe that, despite all the talk that buyers are only interested in the numbers, most really buy for other reasons – location, ambiance, pride of ownership, plus all of the reasons we are told – “hate working for someone else”, “want to be my own boss”, etc. When you have three or four sandwich shops, you stand a better chance of selling one than if you only have one to show.
What are the pluses of having a limited number of listings?
They all are better priced than just taking the listing. They all make sense. If a buyer likes one, you have a better chance of selling it, because the numbers will generally work – one would hope!
So, who’s ahead? The office that is selling one out of three listings or the one selling one out of five? This is all about the ratios! If we divide 200 by 5, that’s about 40 sales. If we divide 35 by 3 – that’s about 12 sales.
A good business broker should be able to get a lot more listings that 8 to 10 a year, even doing a work-up on each, etc. Listings represent inventory – that’s what we sell. Let the buyer decide what he or she thinks is a good business.
