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Expanding
06-20-2016, 04:50 PM
I have an opportunity to "buy into" and expand an existing business... I will use the name, process and all the contractors to complete construction jobs. The problem is that I can't figure out the best way to structure the offer. I will be given qualified leads/referrals from past customers and any assistance from the owner while I expand the company to a new area of town. Do I offer a percentage of the profit of each job and if so, how long or up to what value? The new area will have no prior sales due to the current company not doing work in that area (yes, they have been turning down the referrals that are out of their area) so it's hard to come up with a value of the new location.

vangogh
06-21-2016, 12:12 PM
I'm not 100% sure I understand your question. Is the offer for the past customers? Is the idea that you want to give them something in exchange for the lead? I'm not in the same business as you, but I've never thought that kind of setup was all that beneficial to my business. I think it leads to referrals for the money and not because someone has a good lead for the business. For me it led to clients who weren't idea for me to work with and ultimately didn't improve my business. That could be my business. It could be me. It could be the specific clients who sent me the leads. I don't want to imply it would be the same for you, but I think there are usually better ways to generate business than paying past clients and customers to be your sales force.

Expanding
06-21-2016, 12:33 PM
Sorry, I didn't make that very clear. The current company wants to expand their business by letting me open a new "branch" in an area where they don't work. They get several referrals a month for this area. I would own and operate the new branch and they will feed me any referrals they get along with us using their advertising material. The benefit to me (other than the referrals) is they have a GREAT name and solid procedures in place. So I am at the point which I feel ready to open the branch and I need to put an offer together that either, 1. Pay them a referral fee (similar to a royalty) for each job. 2, Pay them a referral fee (similar to a royalty) for each job done that was a referral. 3. Figure out a value for the branch and pay a set amount to own it out right. 4. A combination of all the above.