In 2012 our friend, colleague and The B&B Team member affiliate Scott Bushnell, who sadly passed away this year, wrote an article about trust. I would like to revisit and share his inciteful thoughts on this subject, the importance of trust and transparency between buyer and seller.
“Just yesterday I received a call from an innkeeper with whom I have had a relationship who was considering selling his inn, a 7 room bed and breakfast inn in a nearby state. Just what we do! Thanks for the call! We opened up a dialog about the inn, its size, its location, discussed the process, and then I suggested he send me a copy of his 2010 and 2011 financials. You would have thought I was asking for his FBC (first born child). “I just will not get into the hassles of trying to explain my financials and business with ANYBODY. Just sell my inn!” He was adamant and fixed in his stubbornness.
My antennae went up like a dog’s ears at suppertime. After failing to convince him that this is an important step to understanding the revenue and net operating income of the inn (to help establish its value), we closed our conversation that perhaps the best way to sell his property is as a residence through the local MLS system since a buyer would never be able to get a commercial loan on that property without the bank seeing the financials. He was satisfied with that…I guess.
But the point is trust. I lost trust with him. Was he cheating the IRS and did not want to let anybody discover it? Were his numbers so poor that I would be trying to sell his inn only on its potential? Does he even have records? All kinds of distrustful thoughts went through my head. I hope all them are wrong. If a seller, perhaps even unwittingly, withholds information from a buyer, trust is jeopardized, and with the limited number of buyers and the huge inventory of inns for sale, buyers will look elsewhere. Building Buyer/Seller trust is critical.”
Almost 6 years ago and this scenario, unfortunately, still plays out like a broken record! When our team members get calls like the one Scott described we do our best to educate both buyers and sellers, explaining the process and how best to proceed. These relationships must be based on trust. Both parties must understand that we have their best interest in mind from start to finish.
Besides the initial trust that must be established, there is transparency. From another wise soul:
“Lack of transparency results in distrust and a deep sense of insecurity.” Dalai Lama
I think Scott would be amused that I am quoting the Dalai and him together in this blog!
Hiding information, whether it is in your financial records or condition of your inn, will eventually come out into to the open. It is inevitable. Yes, sometimes something may be buried (like an old oil tank) and the seller may not be aware of it. This happened just recently in one of our transactions. But it was discovered and removed with all parties cooperating, result… kumbaya! Trust was established before the tank discovery which made a huge difference.
More from Scott:
“Innkeepers…think about the “surprises” that made YOU angry when you bought your inn. We’ve all been there. Think like the buyer of your inn. What roadblocks can be removed now to build Trust and not jeopardize the chances of a timely and financially rewarding transfer.”
Thanks for Listening and…
Thank you Scott. Your legacy and wise counsel lives on.
Tags: buyers, Scott Bushnell, sellers, The B&B Team, transparancy, trust