Blue sky in a business for sale

February 9, 2010

Susie has a business for sale.  The business is a marketing company.  She has been in business for ten years and has made a nice income, kept reasonable records,  built a list of clients, has a company name beyond her own, and has evidence of her services in the market place in a permanent fashion, one that carry forward. Being conservative, Susie has never had an office, uses her own car to get around, her personal phone is her business phone.

Does Susie have something to sell?

Yes but there are things she can do to make the sale easier, more likely to happen.  

If you have a company with few hard assets, your challenge in selling is to be able to clearly demonstrate that the new owner will have something to visualize as owning:

Make certain

1)   your income is well documented with tax returns.

2)  you are willing to give up your personal phone number or start now to transition the business clients and ensure all documents, signs etc are reflective of a phone number that can go with the business.

3) have a snail mailing address that can be utilized by a new owner, perhaps a post office box, an email address dedicated to the business.

4)  have clear records of client activity, such as percent of renewals from year to year, percent of the market, etc.

5)  have letterhead, cards, invoice, and other forms that are formal, not casual documents.

6)  be willing to identify a means to transition the new owner that will have to move into the business in a fashion that will cause the least upheaval to the clients.

7)  have signed agreements if it makes sense.

8)  have marketing pieces that demonstrate value and recognition in the market place, i.e. signs, website, etc.

9)  have a name that is separate from your name.

Basically make the business as formal as possible.

My own story:  I bought such a business for sale.  Basically there were no contracts.  However, it had visibility in the market place.  Perhaps only 1% of the price I paid was for hard assets.  I bought this blue sky business and exceed the prior owner’s income for five years…then the economy hit.

Many businesses for sale are primarily blue sky and they can be highly profitable.

(Do you see that happy face above?  Well, I just can not get rid of it and put in the #8.)

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: