Buying a business thats not profitable

[cjbwebs]

Hi all,

I am interested in purchasing a businesses "name and all trademarks".
They do have some inventory but I am not interested in any of it except for maybe the website.

Right now she is in the hole fairly good, so there is some real motivation to move on so to speak.

I am new here so I am not asking for someone to do my eval just help me see the path to go about making a fair offer.

all help and/or direction is much appreciated

Carlos

[Fulcrum]

$100 and I'd roll the dice on it.

[Owen]

$100 and I'd roll the dice on it.

A non profitable business? I wouldn't spare the energy on rolling the dice.

[CCAdamson]

I agree with the others.

Out of curiousity though. Why are you interested in this business? What will you do differently to make it a success?

[Fulcrum]

A non profitable business? I wouldn't spare the energy on rolling the dice.

To be honest, I was just being facetious (spelling?). CCAdamson is asking the better questions and there are a lot more that will need to be asked if the OP is going to pursue this further.

[cjbwebs]

I agree with the others.

Out of curiosity though. Why are you interested in this business? What will you do differently to make it a success?

I want the name and trades marks for my own branding. My direct market will respond to the brand name as its in their deepest interest and I have tested this with lateral products similar.

I know the market, because I am a part of it 110% for the past 10+ yrs...

Their product (a t-shirt) sells but its minimal, so minimal that its barely eating into his initial investment.
They are outside debt free (no banks etc) as they used they own monies for inventory and some extras.
He was called back to work in his main industry, so they are sitting on tons of inventory and its killing them (motivation).

What would i do different:
His apparel line was based off 1 single sku, mine is based off a brand (the trade mark name) having hundreds of sku's which I have 100+ today and building every day.

I have direct access to my market of 750,000 via social media (I am admin 3 of 6 F.B. groups with the largest being 275k) and being a major contributor in the other 3. My 3 groups are directly related to the source interest which now has international media coverage via cable, satellite, radio stations (100) and internet.

They have expressed and replied to my desire to purchase the marks, name, and possibly website. I made it clear I am not interested in their inventory and they have no issue with that. I proposed possible purchase and for the (marks, name, and possibly website) and would like to help him break even on his inventory (recoup) by allowing his merchandise to be wholesaled until sold on the site as a concession for their terms in financing.

I have website skills, my own servers along with my design skills so directing specific inventory (theirs) to another cart for him to fulfill and break even is easy.
If he broke even, he would be super happy, per his statements to me...

My dilemma is how to calculate these intangibles (I guess)....

Hope that all makes sense...

Carlos

[Fulcrum]

I think the better question is:

What is the name and trademark worth to you?

IP can be very difficult to value so you may just need to take a shot in the dark and start from there.

Edit: Changed post as question was answered and I just didn't read it.

[cjbwebs]

I agree that's the million dollar question.



I think the better question is:

What is the name and trademark worth to you?

IP can be very difficult to value so you may just need to take a shot in the dark and start from there.

Edit: Changed post as question was answered and I just didn't read it.

[cjbwebs]

I went back to my original correspondence to them via email.
Initially he wanted to too sell everything at cost (to break even). This included the lawyers fees for trademarks, LLC fee's, inventory and some trade show materials. By his own admission they go months without a sale.

His own value, on the "IP" as you call it, is break even.
With all his costs (which was the offer) in front of me, I want to structure a deal as I mentioned in my first post where I pay for the items I want with some seller financing and then help him to sell of the the apparel inventory at cost as part of the plan.

Small down payment, term payments with/interest, and then my active help selling his remainder of inventory.





I think the better question is:

What is the name and trademark worth to you?

IP can be very difficult to value so you may just need to take a shot in the dark and start from there.

Edit: Changed post as question was answered and I just didn't read it.

[CCAdamson]

Are we talking about a t-shirt company here?

He had one sku that didn't sell but has a great trademark that you want? How will the trademark be successful if it has already been associated with a failed product? Are you buying it because you like the word or logo? It can be difficult to turn around something already associated with a bad name. Maybe I'm wrong on this but that is what it sounds like you are trying/planning to do.

[cjbwebs]

Are we talking about a t-shirt company here? Yes their idea was just a tshirt and the 1 design.

He had one sku that didn't sell but has a great trademark that you want?
To me yes and what I believe my market will respond to the marks will be a natural fit but the marks are not my product but they surely convey what it is...(which is in contrast to what they associate with it).

How will the trademark be successful if it has already been associated with a failed product?

I wouldn't say failed exactly, I would say they failed to reach the proper target market they went VERY broad.

Are you buying it because you like the word or logo? Yes on both

It can be difficult to turn around something already associated with a bad name.
I don't feel I have turn anything around my targeted market will not have any knowledge of their previous efforts. Mostly since its was so vague an idea it would be natural for them to look at something that does not convey what they love. It doesn't detract from it either but its doesn't speak then language.

Maybe I'm wrong on this but that is what it sounds like you are trying/planning to do.

In a sense I could say yes, but again the thing I know separates me from their efforts
I know my market because I am them.
My products are specific to their fanaticism and the trademarks are natural term within that genre.


Are we talking about a t-shirt company here?

He had one sku that didn't sell but has a great trademark that you want? How will the trademark be successful if it has already been associated with a failed product? Are you buying it because you like the word or logo? It can be difficult to turn around something already associated with a bad name. Maybe I'm wrong on this but that is what it sounds like you are trying/planning to do.

[Brian Altenhofel]

Like others have said, you're basically purchasing IP with what you're wanting to do.

[cjbwebs]

Yeah I get that Brian....

Carlos


Like others have said, you're basically purchasing IP with what you're wanting to do.

[tallen]

Which gets back to you having to decide for yourself what that IP is worth to you. Since you seem to know your market, you should be able to project what it would mean to you in terms of sales and revenue over what time frame if you own or had access to the IP, and then from that basis ought to be able to figure out how much you can justify paying for it. If the value you come up with is greater than or equal to what the current owner is looking to recover, then you just have to come up with financing terms that work. If the value you come up with is less, then you have to convince the current owner that something is better than nothing (a smaller loss rather than a total loss).

But I gather the problem is the inventory of t-shirts that you are not interested in. Consider your costs in helping the owner dispose of that inventory as part of your cost in acquiring the IP that you want.

Would it make more sense to just take the whole package (t-shirts and all) and liquidate the merchandise yourself, rather than trying to help the current owner dispose of them, but in doing so get the current owner to go along with even better financing terms for the deal? This is ultimately a question of allocation of risk -- you take on the risk of disposing the unwanted merchandise, but you get better terms in exchange.

[chrismarklee]

It would depend on the size of her customer base. You would be purchasing that basically. You need a business plan. I would run all this through a local friend connection.

[cjbwebs]

Yeah that's kinda what I was thinking...
I wanted to help with his problem as a concession for terms with the whole thing (a fair exchange at some level).

Honestly, the design of the apparel will do nothing for my market.
But since he only wants to make back his investment, I can blow his stuff out the door for cost as bonuses for my purchasers.

The cost on the shirts is literately 2.74 a piece. I could almost could mark some items up and cover it (two shirts for one idea). But then the challenge is holding his inventory which drums up more risk (unless I pay for it).

If he held the inventory and I sold separately the shipping would eat up the $2.74 (My shipping is $2.90) but to add a shirt in to my bags cost pennies..

Lots to think about..



Which gets back to you having to decide for yourself what that IP is worth to you. Since you seem to know your market, you should be able to project what it would mean to you in terms of sales and revenue over what time frame if you own or had access to the IP, and then from that basis ought to be able to figure out how much you can justify paying for it. If the value you come up with is greater than or equal to what the current owner is looking to recover, then you just have to come up with financing terms that work. If the value you come up with is less, then you have to convince the current owner that something is better than nothing (a smaller loss rather than a total loss).

But I gather the problem is the inventory of t-shirts that you are not interested in. Consider your costs in helping the owner dispose of that inventory as part of your cost in acquiring the IP that you want.

Would it make more sense to just take the whole package (t-shirts and all) and liquidate the merchandise yourself, rather than trying to help the current owner dispose of them, but in doing so get the current owner to go along with even better financing terms for the deal? This is ultimately a question of allocation of risk -- you take on the risk of disposing the unwanted merchandise, but you get better terms in exchange.


I have thought about that and I will factor that in but as matter of Goodwill only, I would be surprised if his customers had interest in my apparel...But yes I thought about that


It would depend on the size of her customer base. You would be purchasing that basically. You need a business plan. I would run all this through a local friend connection.

[Fulcrum]

Another option would be to donate the shirts to a shelter or goodwill type of store. You'd have to check with an accountant to figure out how the dollars work out.

[cjbwebs]

Great idea but likely not worth it from a write off position.




Another option would be to donate the shirts to a shelter or goodwill type of store. You'd have to check with an accountant to figure out how the dollars work out.