I was looking at this post on Instagram yesterday, and it made me chuckle quite a bit, unfortunately. It was a real estate agent he was promoting some restaurants for sale and what was a really hot property a hundred thousand dollars in revenue.
So there’s a couple things there. So here’s a gentleman selling real estate with a real estate franchise whose name even says “home” with their name. That kind of tells me right away their main gig is to sell homes to people, houses, condos, et cetera.
So that’s not commercial at all and here’s so this gentleman or this lady may have passed a real estate course in their province or their state, so they qualified legally to sell a license to sell real estate in that jurisdiction.
But the challenge is, what they know about businesses? They’re trying to sell commercial property so they’re praying similar should come in and they’re going to want a better life for themselves their family so they like the food industry, which by the way has that extremely high failure rate even before covid and now during covid, it’s like roadkill on a long weekend.
So they’re going to sell this commercial property. Can they read a balance sheet? Can they read the PL? lf they haven’t ever created a balance sheet or pl for anybody, there’s a CPA in CMA that done that for small firms and multi-million dollar firms.
And so now you say here’s a restaurant, “client, looks good, seats are nice, here’s all the equipment, you know and here’s the employees, here’s the staff, here’s the location, what do you think?”
Who’s doing due diligence here? Is anybody guiding the buyer in the due diligence process, advising them to find a business lawyer or perhaps a franchise lawyer if it’s a franchise business, talk to your accountant?
I was going to call yesterday with a mortgage broker who said they told a client, “You’ll get a lawyer now, but you don’t need an account until a year from now.”
Whoa are you kidding me? Talk to your accountant up front. Get your buttock book set up, your reporting set up, workers compensation, your taxes, government remittances, payroll taxes, that’s going to be established now not a year from now, holy smoke!
So we have an abundance of insane, actually asinine advice flying out there. And so back to the realtor, what do you really know, honestly? So when I work with you, we discuss you, your skills, your experience, your background, your passions, and your finances.
This is not like buying a pair of jeans at old navy on a weekend where you take it back feel like him on Monday morning. No this is a big investment for you. Do you do a diligence, talk to proper lawyers and accounts, get advice.
You know if the realtor has not experienced a commercial entities, don’t talk to them. It’s incredibly asinine, you guys trying to sell properties that are failing badly. So hundred thousand dollars revenue that in the restaurant business, guess what? That is a euphemism for bankrupt.
There’s a lot of places you can spend a hundred thousand dollars in the franchise world that makes some kick-ass money. Fifty thousand, eighty thousand these some of these franchises have top quartile earnings well over two hundred thousand dollars or something reaching a million dollars in their top quartile.
These are recession resilient, they’re actually more demanded during recessions than they are in a profitable positive economy. They do well b to b, some b to c as well, there’s many sectors that are doing exceptionally well right now. And restaurants, especially ones with 100 000 revenue are not one of those strong sectors.
My challenge as a realtor is 100 000 revenue? Do you mean net income? Are you talking revenue? Revenue is sales. Income is where you put your genes into today, they pay your mortgage, you rent, your car payments, and to feed your children and your spouse.
So talk to the experts, talk to somebody knows franchising, not just some person who want to win with selling commercial property who makes a sale, run away and they’re done with you. Have a great day we’ll talk to you soon.