Selling a Business - Any ideas?

Kayalana99

Hiya guys.

Don't *want* to put to much detail of the actal business but don't see how it could do any harm but for now will keep it simple and see how thread goes :-)

Basicly my Dad has been running his business for 20+ years, has built up a business website + database of customers etc as businesses do.

He is a sole trader and employes no one.

Now thing is this is where it gets difficult, as he puts it he basicly is 'the business' because its actally named after him I.e Sam the **** ..and he deals with all his customers, has really good relationships with them etc so its going to be hard to sell it but for the right person it could be big money.

Has anyone ever sold a business in a simlar postion or have any basic ideas of what to go about? So far he has spoke with a few contacts and is thinking about writing to local businesses in his profession to see if thier interested but this is all new to him so he could use abit of good MSE advise

It would be ideal for someone doing this kind of work under someone else wanting to start thier own business *but* then the likeyhood of them actally having the money to buy it is unlikey...

All advice welcome :-) Sorry its abit vague

Wywth

Kayalana99 wrote: »

Hiya guys.

Don't *want* to put to much detail of the actal business but don't see how it could do any harm but for now will keep it simple and see how thread goes :-)

Basicly my Dad has been running his business for 20+ years, has built up a business website + database of customers etc as businesses do.

He is a sole trader and employes no one.

Now thing is this is where it gets difficult, as he puts it he basicly is 'the business' because its actally named after him I.e Sam the **** ..and he deals with all his customers, has really good relationships with them etc so its going to be hard to sell it but for the right person it could be big money.

Has anyone ever sold a business in a simlar postion or have any basic ideas of what to go about? So far he has spoke with a few contacts and is thinking about writing to local businesses in his profession to see if thier interested but this is all new to him so he could use abit of good MSE advise

It would be ideal for someone doing this kind of work under someone else wanting to start thier own business *but* then the likeyhood of them actally having the money to buy it is unlikey...

All advice welcome :-) Sorry its abit vague

He would need to find someone who (a) thinks there is any value in the business (especially as you say he's a one man band providing a service and presumably he doesn't wish to be included in the sale) and (b) wishes to to buy such a business.

Why does he want to sell his business which it sounds like he's spent most of his working life building? :huh:
e.g. can he already see it's days are numbered?

Kayalana99

He is basicly looking to retire, he has quite alot of good ideas to progess the business which I told him to write down to present to people wanting to buy but he's just not got much way of going about it.

If anything, for the right person they could easily expand it/get more business but obvouisly as he's been running it so long and is happy with the work he has been getting he has had no reason to try harder lol. The service itself can be provided by someone else easily enough but its more that the customers have been dealing with him for so long and they are all reasonably small-med companies that if someone takes over it would mean the loss of *some* business as my Dad is very good friends with majorty of them and can sometimes spend hours on phone with them...

But saying that though, in this business it would be easy to pick up new clients as well as holding onto the maj of the older ones.

Kayalana99

So far he has one person interested but they only want his customer list..not the business. Probally find this person isn't going to pay what he wants for the business.

He wants to find the right person as well, not just for the money side of things but as you said he's spent his whole life building it up and doesn't *really* want to sell it in bits...although he probally would for the right offer lol

Savvy_Sue

From what you've said so far, I'm not sure this has much value at all, I'm afraid. What the business consists of is one man, providing a service. and what seems to be valued is the man providing the service. There's probably value in the customer lists, but as you say, people may not want to pay much for those.

And I definitely would NOT show his ideas to anyone interested. Wait until they've paid money. Otherwise they could just nick his ideas and start themselves, which tbh many might prefer to do.

However, I'm no expert in this area, so has he talked to his accountant? Do they have any suggestions?

Wywth

Kayalana99 wrote: »

So far he has one person interested but they only want his customer list..not the business. Probally find this person isn't going to pay what he wants for the business.

He wants to find the right person as well, not just for the money side of things but as you said he's spent his whole life building it up and doesn't *really* want to sell it in bits...although he probally would for the right offer lol

Other than the customer list (which as you say is unlikely to yield what your dad wants for the business), what is the barrier to entry of anyone else providing this service?

Which leads onto why would anyone pay more than the value they put on the customer list?

colino

As said, if other people can and do provide the service, the value is in the eyes of the beholder and that is the additional customer database. Unusually the extra bit that sometimes can be awarded points is the intangible "goodwill". However if the business is in the name of the cheery provider of that service, that would evaporate on the first call. "Your not Sam".
Unfortunately as it is not possible to tell if he is better, cheaper, quicker at the service because of some unique or secret technique or device, hard to see any other strong points.

Pennywise

How much profit does the business make? If all it does is provide your father with a living wage then it won't be worth much given that it sounds as if the business consists of little more than personal goodwill.

It's very common for "one man" businesses to grossly over-value their businesses and also very common that the owners hold on for so long to get the "right price" that the business ends up going down the pan or the owner dies or suffers ill health, and in either case they end up getting nothing for it or just a token/nominal amount. Seen it far too many times.

Has he spoken to any business sales agents? I'd avoid the national chains like the plague - they over-value to get the business, charge in advance for advertising, etc., and then tell you to reduce the price after a year when you've had no interest. Smaller, local, firms tend to be more realistic and give you a value that is more achievable.

Please try to get him to separate the emotions from the business. No one else is interested in the history/emotional/personal aspect - they want to buy a business and get a good return - that's as simple as it gets.

If historic profits don't make it look attractive (i.e. aren't over national average wage), then it won't sell at a higher price. People won't pay for potential when it's them that have to do the work to achieve it. If you father genuinely believes it has potential, then the only way to generate that value is to grow it himself and get the turnover and profits on an upward trend, year on year.

Wouldn't your father be better to get a more realistic price today and then go on to enjoy retirement, rather than plodding on another few years in the hope of the "right price" in his mind, whilst watching the business go downhill and getting ever closer to ill-health, meaning less time to enjoy his remaining quality years?

Kayalana99

Ok, I have thought of something else which never even occured to me (Probally has occured to my Dad but hasn't come up in this way) the customer list is pratically worth nothing without my dad's files.

I was talking to him last night, as the guy who is interested in the customer lists wants his top ten customers and a break down of how much they spent with him that year (he is not going to give him his customers names just the figures) and he was abit worried about it as he has like 200+ customers in his database, and although some are regular most are 'as needed' and he was telling me that he hadn't heard from a customer in over 18months and they called this week to make a repeat order which basicly meant £250 profit from less then half an hours work because he already had the 'data' from last time to simply repeat and send off goods.

If the person had the right skills, the files could be re created but this is the most time comsuming part of the job and they do need to be edited (so the person taking over the company needs these skills as I said before to run it)

So I guess what would also be holding the customers to the business is the fact if they went elsewhere the other business would most likey charge them again for re doing something that the person who takes over the business would have ready and set to go.

Sense? lol

Also profit wise I am not 100% sure but I know its above £2000+/monthly but obvouisly when big orders come in it can be alot more. Time wise is a hard one to factor in as it varies what he has to do but its a full time job for him anyway.

He has spoken to his accountant and tbh doesn't sound like he was that helpful, but he is thinking about a business sales person that his accountant mentioned but didn't know alot about it himself tbh. Its very early stages atm which is why I was asking for ideas to actally sell a business :-)

AbbieCadabra

might be worth asking on UK Business Forums ? i've found them very knowledgeable & helpful.

Kayalana99

Thank you, will try that as not having much luck on here to actally how to sell :-) (Although I do apprecate the advice)