In my last few posts I had it about being a fool and paying too much for anything. I want to share with you this true story from my own life.
A couple of years ago I was looking at buying a filling station. I saw an advertisement and phoned the agent. We went to the site. The station use to sell about 350 000 liters per month, but “because the last owner was no-good”, it was now only doing 90 000 liters. There was no shop, no extras. Just a couple of old pumps tended by almost dead attendants. I said the price is too high and the agent referred me to the contact person at the oil company.
Now let me give you some background on the station. Although the site is on a very busy road and very close to many industries, it is not a nice area – I would not allow my daughter or wife to work there, it feels unsafe. For a long time it was the only station in the area, but I knew that another oil company opened a site a couple of kilometers away. Theoretically the new site should not influence this one, but theory and reality is not always the same.
So I phone the contact person and asked him about the site. His opening words were historical – the site did do 350 000 liters before and it could do the same again. I reminded him that the site was doing much less and without an operator would do even worse. He agreed with me.
Then we got to the price and I said I think they are selling the site as if it were doing about 180 000 liters, double what it is doing. “Yes, you are right.” “But why are you doing it?” Says Mr Oil Company: “But surely you realize the site has potential?” “Of course I realize it, that is why I am interested. But what you are asking me to do is to buy the potential, work very hard for long hours without any pay to realize the potential. And only then will it be worth what you are asking for it. In other words, you want ME to pay in advance for MY efforts? I am not going to that! In fact, you should pay me while I build up the site!”
At this he laughed and said: “You are absolutely right, I have never thought of it that way. But it does not matter if you don’t buy, we will get somebody else who will pay our price.”
From time to time I drive past this site (even fill up sometimes) and it is definitely not doing close to 350 000 liters. In fact, I would be surprised if it did more than 200 000. If I did buy it (the first fool), then today I would only be able to sell it at 200 000 liters – I would never be paid for my own efforts! I might even have lost everything I own, like the previous owner. And I can testify to this: I have never been able to find a second fool.
But always remember what Mr Oil Company said: “We will find somebody who will pay our price.” Just be sure that YOU are NOT that person.
Be Wise, Buy Wisely.
Yesterday I said that marketers love fools. It is logical, because there is a saying: “A fool and his money are easily parted.” Does it mean that marketers are dishonest? No, I don’t think so. I do think there are dishonest marketers, as there are dishonest people in every occupation – but that would be as far as I am willing to go.
Many people believe all marketers are dishonest and can tell stories to proof it. The development I referred to yesterday, many people losing money hand over fist blames the marketers. It is easier to blame the marketer than to admit that you were a fool! But in most cases I don’t think the marketers were dishonest.
We must understand something about a good marketer and a good salesperson (I wish I was good at it). I will try to explain with a story. My youngest daughter is an excellent salesperson – born that way. My middle daughter (I have three) is not a salesperson, but very creative. So the middle daughter started making bead necklaces and jewellery and the youngest sold at school. As happens in many businesses, there soon ensued a fight between marketing and production, because sales outstripped production by far. That is another topic.
I asked my youngest daughter how she did it. This was her reply: “It is actually very easy. I like my product. I show it to people and I am very enthusiastic about it and then they are very enthusiastic about it and they buy two or three.” (She was 12 years old at the time!) The key phrases: “I like my product” and “I am enthusiastic”.
I think a good marketer and salesperson is optimistic by nature. So with the sales person’s infectious optimism and enthusiasm, we get involved and in the end nobody can stop us from buying. We will fight to sign the contract. Good sales people …
I am very, very analytical so this is easy for me. I always want to check that it makes “logical sense.” But many marketers are not like that. If a developer tells them it is a good deal and that the price will treble in a year and rent will be astounding, they believe it. They don’t challenge it. And it is NOT only in property sales. Some people just go out and sell. They believe the company and it is not their job to check what the employer claims. So they believe the claims the employer makes, even if it is unrealistic. It just fuels their enthusiasm. And they get many buyers so excited that they JUMP on the bandwagon.
That is what I call the marketing hype – the cloud with free food, beer and wine served by topless girls – there has got to be a catch! Just separate the facts from the hype, and decide on the facts. That is wise, and you do want to buy wise, don’t you? The salespeople out there should give me good marks for this tie down!
Tomorrow I will tell you about the time when I was not a fool.