Business series on CNBC goes a step beyond The Profit, looks at what small companies do to land that first big sale
By Robin Rowe
HOLLYWOOD, CA (Gosh!TV) 2016/4/20 – “Let’s see what they can do,” says Billion Dollar Buyer star Tilman Fertitta. “Will they blow this deal? No deal? Well, I guess sometimes things just don’t work out.”
Billion Dollar Buyer and The Profit are my favorite business reality shows, but are very different. In The Profit, the objective is to convince an investor to save a struggling family business. In Billion Dollar Buyer, the objective is for the small business to make a big sale.
The first thing you need when hosting a show about real business in America is amazing patience. If you watch CNBC The Profit, you’ve seen Marcus Lemonis encounter some pretty conceited and incompetent business people. And so does Fertitta, the sole owner of Landry, a conglomerate of restaurant chains and casinos including Bubba Gump Shrimp Co., the Golden Nugget casino, Rainforest Café, Morton’s Steakhouse, McCormick & Schmick’s and many more chains.
When Fertitta places an order to supply one of his chains, it’s a big order. A game-changing event when the seller is a small business. Fertitta may be the richest man in America who is the sole owner of his business. He doesn’t have to consult with anyone to make a buying decision.
You might expect that the small companies seeking their first major sale to a conglomerate would be humble, grateful and well-prepared for the meeting. Not really. As in the The Profit, some small business owners show amazing hubris and vanity. It’s can be maddening watching these difficult people blow a deal by jacking the price or not keeping their word. Dealing with small businesses is a lot harder than it first seems. Why aren’t American businesses smarter?
Billion Dollar Buyer and The Profit seem more relevant than Shark Tank and Undercover Boss. The business decisions in the former are real, not a stunt or game show. The unique value of Billion Dollar Buyer is that it’s a real buyer. And, it isn’t a game show like the cancelled NBC Fashion Star. Billion Dollar Buyer shows what happens in a real business sales meeting.
In The Profit, Marcus Lemonis obviously loves his work. He shares insights into how to make sound business decisions. Billion Dollar Buyer offers insights, but makes you dig for them. Tilman Fertitta doesn’t seem to take as much delight in business as Marcus does. Is he having any fun?
While it’s sound general business advice not to become too dependent on a single customer, it seems surprising that Fertitta often presses small companies to seek new business as a condition of working with him. Shouldn’t a small operation be focused on fulfilling his large order, not out chasing new business at the same time? If they get too much new business, expanding to service it might sink them. Do these entrepreneurs know how to capacity plan and cut costs through scale? From watching the show, I expect they don’t have a clue. Some don’t even know when to say yes or how to keep their word.
Anyone in a wholesale business should know what keystone is and able to right-price. They should be able to look at prices on Fertitta’s restaurant menus, and divide by 2 to calculate what his target wholesale price would have to be. They should also be able to figure out how many units he will need. It could be fun for the audience if Fertitta clued us in how the business math works before the meeting, so we feel smart and identify more with the buyer.
For example, Fertitta could say to the audience that he’s looking for a wholesale price of $5 for 5,000 units and why that’s his sweet spot in this deal.
Fertitta routinely does market testing of new products. Why is 85%, that is a grade of B+, enough the right number in customer satisfaction? What does each point difference in market testing mean in forecasting sales?
Want to pitch your product to Fertitta’s restaurants and casinos? The second season is casting now.
Billion Dollar Buyer broadcasts on Tuesdays on CNBC at 8p/9c.