By SIMON COOPER
Res Socius
STARTING out is tough in many different ways. I still remember my first days at high school, and my first week at work. I was nervous the day I decided to propose to my wife. Is natural conservatism the reason for this reticence, I wonder, or could there be more to it. Is nature trying to tell us something?
As I look back on what seems like a lifetime dealing in every conceivable kind of business for sale, some things stand out in repeating patterns, too. The classic question every broker faces is: "Why should I pay to buy a business when I could start my own." Believe me, starting a new business can be a far more expensive way to go.
The Internet has cemented the impression that all you need is a half-decent website and a bright idea. We've all read about web-based successes. However, these are visible tips of icebergs, and it can be far chillier down below.
The UK supermarket chain of 1,800 Tesco stores, with over 260,000 employees, succeeded with an online grocery delivery business. Clone Webvan.Com built a huge infrastructure serving eight major US cities on the back of $375 million, only to flop miserably due to low margins, unreliable deliveries and the lack of a critical mass of customers. The difference was that Tesco built on an existing business, while Webvan.Com's foundation was a bubble.
Everyone loves a furry friend. Pets.Com was another classic example that saw $85 million of investor money go up in smoke. The idea of delivering the new family member direct to the front door was a cute idea - except that terrestrial pet stores do not have that expense, and easily undercut the website. This time, the entrepreneur's mistake was that the gap in the market did not exist, because pet stores and breeders were everywhere already.
Which child can resist a cuddly toy? eToys.Com thought that parents would prefer to shop online instead. Unfortunately for their investors, their $166 million shrunk by 99 per cent in share value over two years. The reason was that nobody buys chocolate bars online either. It's the in-store kiddy pester power that pressurises parents into purchasing, just like those torture tunnels you must pass through at supermarket checkouts.
The success of any business - whether Internet-based or not - depends on the coincidence of two events. There must be a gap open in the market, and a gap in that market, too. While it's true that Mark Zuckerberg and his college pals made countless millions without thinking these things through at all, it is equally true that they are an almost statistically irrelevant exception.
Starting out in conventional business is similarly fraught with difficulties. These range from "how am I going to afford the overheads while I'm chasing sales" to "where have the customers all gone that I expected?". And this is perhaps the case-closed argument in favour of buying an existing business for sale from a reputable business broker.
NB: Simon Cooper is a founding partner of Res Socius, a business brokerage firm and businesses for sale directory service. Res Socius is authorised by the Bahamas Investment Authority to facilitate the sale and purchase of businesses and provide consultancy services. Contact 376-1256, visit www.ressocius.com or scan the QR code below.
Comments
laserhaas 12 years, 5 months ago
Unfortunately, many have been fed the wrong details on eToys by a corrupt "press" of erroneous facts; for the sake of some seriously corrupt agendas.
It is not your fault.
I am Laser Haas, was the court appointed fiduciary in the eToys federal estate case (Del. Bankr 01-706 (2001)) and have the REAL "insiders" take on the real events.
First of all, the notion that eToys was broke is erroneous - it was plundered by cook books intentionally. Goldman Sachs took eToys IPO in 1999. Also in 1999 Mitt Romney & Bain affliiated parties owned "The Learning Center" that was merged with Mattel. The law firm that handled the merger was Morris Nichols Arsht & Tunnell (MNAT). Which also handled Hughes Aircraft & the Mormon church's claim on the estate.
MNAT lied under oath (now confessed) that it had no connections to Goldman Sachs etc. Doing the lies to a chief federal justice over 14 times during a 4 year period. In order to become the attorney for the eToys federal estate.
Paul Traub, Barry Gold & Michael Glazer (the CEO of Bain's Kay Bee Toys) all worked for Mitt Romney in the southern Texas bankruptcy of Stage STores.
Then, Paul Traub lied to become the eToys Creditors counsel 17 times in 4 years (confessed also). Whereupon MNAT & Mr. Traub then placed in Barry Gold President/ CEO of eToys.
MNAT then asked for and received (because Barry Gold & Paul Traub did not object of course) - the federal court's permission to Destroy the Books & Records of eToys This was because eToys was Not bankrupt - everyone was stealing - and they wanted to Obstruct Justice by destroying the evidence. Including the evidence that the eToys stock went from (the projected) $18 to more than $78. But eToys only received $16.50.
Paul Traub, MNAT & Barry Gold sold eToys to Bain/ Kay Bee for FREE. Paying themselves $10 million dollars in the process.
This is all facts which I have testified to Under Penalty of Perjury and it is now coming out, due to the hubris of the parties believing they can make it to the White House & continue to cover it all up.
Our case and my turning down their $850,000 bribe is the sole reason for Mitt Romney lying about him leaving Bain in 1999. When, to the contrary, he was the defacto CEO of Bain Capital until August 2001.
In August 2001 - The EVENT - which provided for a huge cover up of massive frauds; included a law firm partner of MNAT (Colm Connolly) being nominated and becoming the Untied States Attorney in Wilmington DE. Where for 7 years (from 2001 to 2008) he refused to investigate & prosecute his former clients & partners by betraying his Public Oath of Office.
Now, the investigations (PURE) have begun and those who were willfully blind are going after those they were (in essence) protecting. Paul Traub was named as the defacto controlling party of the Petters Ponzi scheme in MN - last week.
http://www.startribune.com/business/158…
http://tribune242.com/users/photos/2012…
laserhaas 12 years, 5 months ago
Oh, BTW - being that the federal investigations (and probable indictment) of Paul Traub/ Bain Capital organized criminal empire has begun - there's that little matter of SanKaty in Bermuda (Romney's 100 % owned off shore entity he is Not giving details upon)
There's also other off shores that are likely to be investigated (and assets seized)
Like Bader Company (Indiana)
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