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.