American Business Brokers & Advisors - July 2023

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American Business Brokers & Advisors Founder & President MERGERS & ACQUISITIONS BUSINESS VALUATIONS

JULY 2023

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Is the Market Value of Convenience Stores Starting to Drop?

Hardly a day goes by where I do not have a conversation about whether I think the value of convenience stores has started to decline due to high interest rates. If you read any financial newspaper or watch a financial show on television, the narrative is about inflation and higher interest rates and how they are affecting the economy and the value of real estate around the country. With all of this talk, you would expect house prices to be dropping and the same thing happening to the value of convenience stores and the prices they are selling for. But the opposite is happening. Let me explain why that isn’t the case and what is happening. In Finance 101, we are taught that the price of something is determined by supply and demand. If you were stranded in the desert and needed a bottle of water, you would pay an enormous price for the bottle of water because of your extreme demand due to not having any water available. This is the simplest version of supply and demand. If too much of something drives the price down, and too little of something increases the demand and drives the price up, this is what we are experiencing in today’s marketplace in certain sectors of our economy regardless of the amount of money it costs to purchase something. Ultimately, this is what is happening with the market value of convenience stores. The demand for buyers to find good-quality, profitable convenience stores to purchase is stronger than the supply of good-quality, profitable convenience stores that are available. Why is this? 1. There are not that many A+ sites left in the right market areas of the country. So, if you want an A+ site that is proven, you will have to buy and rebuild an old store. A prime example of this, for those of us who are older, is when the big box stores came to a town and what happened. Generally, when a Walmart or one of the big box retailers came to town, they were located on the edge of the town, and the town would grow to them and the new area became the place to be. However, unless you are in a high-growth area of the United States, all the good retail sites where the traffic is are already taken. There is no new growth to capitalize on. Therefore, if you have an A+ site in today’s market and you are not in a high-growth area, chances are you are going to have an A+ site for many years to come, and some of those A+ sites are presently taken by an outdated convenience

store which should be replaced by a store that is more spacious and offers more products to serve today’s customer.

2. The convenience store industry has “long legs,” meaning there is a long future for the convenience store in the years ahead regardless of whether the vehicles are electric or running on fossil fuels. Convenience stores are in existence and were built for one reason. Convenience. They were not built to be discount retailers. No, that category is being filled by the Dollar Stores and Walmarts of the world. Convenience stores are for the convenience of the customer, and our customers just happen to be traveling into our stores with combustible engines which operate on gas and diesel. Our customers are not going to go away; instead, they are just going to change the method of how they get to us. 3. It is always cheaper to buy an existing business that is well-located and has a cash flow than it is to be a pioneer and start from the ground up. (Good operators who want to increase their return on their investment ROI already know this.) I have sold hundreds of convenience stores to operators who know it is a safer bet to take a convenience store that is already in existence with a good location and change the size of the building, the look of the building, the employees, and the product mix and more than double the profitability of the convenience store rather than invest millions of dollars and hope and pray the store they built was in the right location and what they did was correct in the hope the customer will come. Believe me when I say there have been more stores built that took a lot longer to become profitable than the number of ongoing businesses that were bought and turned around to profitability with an existing business to begin with. So, has the market value of convenience stores dropped because of higher interest rates? No, not with the buyers I am dealing with. As a matter of fact, values have not changed from where they were a year ago, and that is because there is a minimal supply of well-located and profitable convenience stores for sale. Will this change soon? Unless interest rates begin to skyrocket and lots of convenience stores come Continued on Page 3 ...

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An Estate Planning Must

WHY EVERYONE NEEDS ADVANCE DIRECTIVES

wishes, and a living will is considered a type of advance directive. If you find yourself severely ill or injured, advance directives help you express your health care preferences if you cannot communicate. WHAT IS A LIVING WILL? While a living will is within the advance directive category, it specifically determines your wishes if you become terminally ill. Not everyone has the same wishes when it comes to end-of-life care, so your living will communicates what medical procedures you would or would not want to undergo if you were either terminally ill or in a coma. Some individuals may only want their life prolonged for a certain amount of time for personal or religious reasons or not at all. A living will helps the medical staff and family follow those wishes. DIFFERENT TYPES OF ADVANCE DIRECTIVES Since it’s a broad category, not all advance directives are limited to terminal illnesses. Various forms of advance directives aim to

help loved ones from having to make stressful medical decisions that may or may not be wanted by the patient. Some forms of advance directives include:

Medical Power of Attorney: A document that names someone who can make health care decisions for you if you can’t communicate Medical Orders: Orders created by a medical professional with their patient’s wishes that are shared with other medical professionals. For example, it could detail a do-not-resuscitate (DNR) order. Psychiatric or Mental Health Directive: A document created by a person with mental illness that details their health care wishes before a possible mental health crisis, when they may not be able to make decisions

When discussing estate planning, we often think about wills and the disbursement of our belongings after we pass. Yet, there’s plenty to organize, protect, and ensure when we are still alive. One aspect of estate planning we often overlook are advance health care directives, including living wills.

When it comes to advance directives, every adult should consider establishing their wishes as soon as they can. No one knows what the future holds, and it’s best to arrange your health care wishes before it’s too late.

Advance directives are a wide category of written instructions covering your health care

WHAT ARE THE TOP 3 REASONS TO SELL YOUR BUSINESS?

Recently, I was talking with one of my brokers who works with American Business Brokers & Advisors as to how things were going and if he was busy. He told me he was so busy working with business owners who were wanting to sell their businesses that he didn’t have time to follow up with some of his past contacts because of the phone calls he was getting from new business owners who were interested in selling. I knew he had been busy with the number of transactions he was closing, but I had to ask him what he thought was the procuring cause that increased the number of business owners who wanted to sell. His answer was plain and simple. He said there are three reasons his phone is ringing off the hook. • Retirement. He said the majority of the calls he gets are from baby boomers. They generally have been operating their business for 30–40 years and have profitable businesses, but they are ready

to close the chapter on being a daily operator and move on to retirement. It doesn’t matter if they are making $100,000 a year or $500,000 a year; I see it every day, too. He said they are just tired and burned out with the business. • Employees. The pandemic was the nail in the coffin. Finding, training, and keeping employees was hard enough before the pandemic, but after going through the pandemic, it has only gotten worse, and judging by the way things look now, it is not going to get any better. I know this to be true because I have business owners tell me that unless they are willing to coddle and stroke the employees, the employees they have will go down the road and work for someone else. (Oh, by the way, this issue is not just exclusive to the convenience store industry, either. It is across the board).

the United States, politics comes into play. Some states are more business- friendly than other states, and business owners are not dumb; they know where they are wanted and not wanted. Unless you are a large corporation with an H.R. department and finance people who are trained to work across multiple regions and states, it is hard for a small-business owner to work in a state that thinks the sole purpose of the business is to be taxed for the welfare of the state. I know there are several other reasons why the numbers of business owners wanting to sell their businesses are on the rise, but in today’s world, these would be considered the top three. You may want to make an assessment and see if any of these reasons are applicable to your situation.

–Terry Monroe

• Politics. I don’t want to get political, but depending on where you are located in

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SUDOKU (SOLUTION ON PG. 4) Take a Break!

"HIDDEN WEALTH" The Secret to Getting Top Dollar for Your Business

TERRY’S QUOTE FOR THE DAY “Don’t wish it was easier, wish you were better. Don’t wish for less problems, wish for more skills. Don’t wish for less challenge, wish for more wisdom.” –Jim Rohn ► What is the value of what you are selling? ► Want to make sure the sale is confidential? ► Want to sell everything together & fast? Terry has sold over 857 businesses. His book tells you what to do and more importantly what NOT to do when selling one's business. GET YOUR FREE COPY TODAY! Email Terry@TerryMonroe.com Put FREE COPY in the subject line for your free copy of "Hidden Wealth", a ForbesBooks publication.

WORD SEARCH

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onto the marketplace, the sellers of convenience stores are driving the market price up. Will this change? Absolutely! Everything cycles.

One of my favorite conversations to have with owners of convenience stores is when I ask them if they are interested in exiting the business and selling their stores, and they say no because they have a plan. They say that in five years, they are going to get ready and then think about selling their stores. I always agree with them and tell them it is good to have a plan. However, the marketplace doesn’t really care about your plan, and if you would rather wait and sell at the bottom of the market instead of at the top of the market, I am okay with that, too. Today may be a good time to ask yourself: What works better for you? Selling when the demand is the strongest or waiting until the marketplace cycles down and is no longer a “seller’s market”? –Terry Monroe

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INSIDE 7824 Estero Blvd., 3rd Floor Fort Myers Beach, FL 33931 1 Is the Market Value of Convenience Stores Starting to Drop?

Sudoku Solution

The Difference Between Living Wills and Advance Directives What Are the Top 3 Reasons to Sell Your Business?

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Thinking About Selling Your Business in 2023?

Storytelling Should Be Your Marketing Priority

Tell a Story and Gain a Following BUILD LOYALTY WITH STORYTELLING MARKETING

We all love stories. Be it books, movies, or current events, we can’t help but thrive on storytelling in our everyday lives. We even process information better when it’s told as a narrative. A study by psychologist Jerome Bruner discovered that people were 22 times more likely to remember a fact when embedded in a story. That makes storytelling a powerful tool to reach your audience.

Storytelling marketing is when brands use a narrative to convey their message. In our era, consumers require more than a basic display of your product. Consumers are searching for why they should trust — and buy from — you. The best way to do this is to utilize storytelling marketing. Not only will it help customers better understand your business, but it also humanizes your company. HOW CAN STORYTELLING BENEFIT YOU? Businesses worldwide have been reaping the benefits of storytelling, and it has worked well enough to become the new standard. Whether you’re sharing why you started your business or adapting stories that align with your company’s beliefs, storytelling marketing can:

Build a connection with potential customers

GET STARTED ON STORYTELLING MARKETING. While the benefits of storytelling marketing are clear, it’s a bit more challenging to execute. You might struggle with your story and what you should share. Consider what motivated you to start your business. Entrepreneurship isn’t for the faint of heart, and there must be various reasons for this endeavor’s importance to you. List all the events and ideas that led you here. Next, design your anecdotal story to align with the ideals of your desired audience. Instead of sharing your story, you could create a tale with powerful metaphors and a lively narrative to draw in your audience. Whatever approach you take, storytelling marketing will ensure you leave a greater impression.

• • •

Make your brand memorable

Separate your business from competitors

Share your message and ideas

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