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Sale Shows Benefits of Buying
By Glen Cooper, CBI,CBA, BVAL
There are seven benefits to buying a business: customers, employees, market position, established systems, financing, cash flow and reduced risk.
For Dan Craffey, new owner of Moose Landing Marina, in Naples, Maine (formerly Mardon Marine), six out of seven were good enough!
Customers, Employees, Location & Opportunity
“When I bought this marina through Maine Business Brokers’ Network, I got all the benefits of buying an existing business except one – I had to turn it around,” says Dan. “I kept the customers and employees and got a great location! I got financing and received a quick positive cash flow from immediate sales. My risk was lessened because I could see a clear opportunity.”
“The only thing I didn’t get,” says Dan, “is good operating systems. The seller had been an absentee owner. The business needed fixing.”
Dan Craffey’s background is a lengthy one in supermarket management. He has owned several area AG grocery stores over the last eighteen years.
So, how does that qualify him to run a marina? “Simple,” says Dan, “I run it like every other business I own. It boils down to one thing: treat people like you would want them to treat you.
I focused on three things when I bought this marina. Customer relations came first. Then employees. Then the town itself.” Dan credits his immediate success the first new season out with the initiatives he took in these areas.
Almost all the old customers are back. “I’ve made some changes that some existing customers didn’t like, but all but a few appreciate the new policies. I kept the old employees and hired more. The previous owner almost never came to the marina. Being here myself on a regular basis makes a big difference.”
Sales Surge to New Heights
Since acquiring the marina, Craffey is heading toward triple the sales volume of the previous owner. Dan bought the marina in the spring of 2003, just before the season started.
For years, the marina has been known as the “Pontoon Capital of Maine.” Today, it is the #1 volume pontoon boat dealer in New England, according to Garth Scott, regional sales representative for Godfrey Marine. Godfrey is the leading pontoon boat manufacturer in the U.S.
“We have been very impressed with how Dan Craffey has turned this marina around,” says Scott. “Dan’s hands-on management style is obviously creating sales volume.”
The business has been a full-service marina since 1979 – selling, renting, servicing and storing boats. Increasing sales was the first priority. Dan now plans to concentrate on increasing boat rental volume and re-building the physical plant.
Since the marina acquisition, Craffey has also purchased the land next door and plans an expansion of the entire facility to begin sometime this fall. The new land, with additional 250 feet of frontage, will give him the ability to add slips, to create a better retail center, and possibly to construct a major boat storage facility.
Lesson From His Mother
Dan Craffey’s formula for success doesn’t come from the latest business “how-to” book – nor does it even come from his extensive grocery store ownership and management experience. It originates with the example set by his mom. Believe it or not, Joanne Craffey, Dan’s 70-year-old mother, still runs a business in Massachusetts.
“My mom is great!” says Dan. “I watched her run and build a small nursery pre-school in Lunenberg, Massachusetts, which she still owns and runs today. I watched it grow from just a few children to nearly 100.”
“Even though her parents failed in a business in the 1940’s, and she told me just to go out and get a good job,” Dan recalls, “I guess I watched her example more than I listened to her advice. She saw an early experience of business failure, but it didn’t stop her.”
“I have watched my mom treat people kindly all my life. I learned that’s the way it’s done. When a customer needs something, as long as it’s reasonable, we do it,” says Dan.
“The people who work here with me know that’s the way it should be. Employees appreciate an on-premises owner with that attitude. It allows them to do work they can be proud of. They know that I am fair with customers and with them.”
“When I contacted Maine Business Brokers, they were the seller’s broker. They had worked with the seller to determine the offering price.It’s not easy to figure out what a marina is worth, but the price seemed too high. After I had a chance to observe the workings of the marina, though, I realized that there was a genuine opportunity here.”
“I made an offer a little lower than the asking price. Negotiations lasted a long time. But, in the end, I think I paid a fair price. To me, the price wasn’t justified by the previous owner’s tax returns. But, I thought that I could do much better as a new owner. The foundation had been laid for a successful business going forward.”
The Buying Process & How It Works
When Dan called on the listing, he was required to register as a buyer prospect. He completed a financial disclosure and confidentiality agreement. This is the standard process that business buyers can expect.
After registering, Dan received an “Offering Summary” on the business and property. “You at Maine Business Brokers’ Network do the best offering package of any broker I have ever seen,” says Dan. “As a buyer prospect, it gave me all the information I needed to decide whether or not I was interested. It saved the seller and me a lot of time. The offering package answered most questions right up front.”
The next step for Dan was a meeting with the seller to discuss the information contained in the Offering Summary. It is typical for a seller to meet a prospective buyer after the buyer has had a chance to review the seller’s marketing information. Sometimes this is at the business site. Other times, there is a need for an off-premises meeting to preserve both seller and buyer confidentiality.
Long Negotiation Resolves Price/Terms Dispute
“Without Maine Business Brokers’ Network,” says Dan, “I really don’t think I would have purchased this marina. I had a major disagreement with the seller on price. Without the skilled negotiation by the brokers, it just wouldn’t have happened.”
As Dan next discovered, he was in for a long negotiation. Dan was an early buyer in our marketing process, but walked away when he felt the price was too high. The seller was against lowering the price. After lengthy discussions – many months, actually – with both parties, we finally got Dan back and the deal came together.
“Even though you [Maine Business Brokers’ Network] represented the seller,” says Dan, “I found out you were reasonable and understood what I needed to make it happen. There were many things to iron out before this could go forward – the agreement, the financing terms, the transition to new ownership. You helped a lot. I don’t think that most people would ever imagine how complicated this can be, and how much you do to make it happen.”
The secret to a successful business sale is simple. There is a need to clarify the seven business buying benefits for the buyer (customers, employees, market position, established systems, financing, cash flow and reduced risk) and follow the advice of Dan’s mom – treat people like you want to be treated.
Click here for our Seller Packet.
“We really appreciated how easy you are to work with. You are very professional, yet you are fun!”
John & June Stauffer
Sellers, Maine Bucket Company, Lewiston, ME Letter
