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billbenson
10-27-2009, 11:32 PM
I really don't like what I do, but its starting to make quite a bit of money. Here is what I do:


Website that sells a construction related equipment. Expensive stuff.

I get about 15 to 35 phone calls a day for quotes, questions etc. At least that in emails as well.

I'm the only person, so I spend 12 hours a day playing salesman and extra hours and weekends with with web related stuff.

A lot of my leads come from Adwords. Others are from natural SERPS. All leads are web related


I'm thinking about selling it in a year or two, not today, but will it have any value?

The problem is, it makes money because of me. I don't want to go to competitors because they could just pick my brain and say no thanks. It's a highly technical product and would take someone somewhat technical about a year to get a feel for it. They would also need some sales skills to make a success of it.

I think its pretty plausable to have 500k in sales in a year or two. No overhead, high margins so it could be bringing in some reasonable money. But is something like this sellable?

vangogh
10-28-2009, 12:11 AM
Hmm? If you're essential the the business making that kind of money and you don't come along in the sale it may be a hard sell. Could you reasonably train someone to do what you do in say 3-6 months? If so that could be part of the sales package, where maybe you get a salary during the training and slowly move control of the business from you to whoever buys it.

For it to be a good value for someone to buy they have to be able to make similar money without your presence. However they may not realize that until after the sale. You could probably sell the business based on the revenue numbers, etc.

Since you're not looking to sell right away you may want to start working out how someone other than you could run the business and make similar money. Maybe start documenting everything you do. Create a training manual or something for whoever comes next. That could make the sale more attractive later.

billbenson
10-28-2009, 01:20 AM
perhaps hire someone and train them and they would go along with the package?

My problem is I hate the sales side of it. Sometimes its slow and relaxing, but more and more I get call after call on top of each other. You've got to respond instantly. It just gets extremely intense at least for several hours every day. Today I just finished sending in my last order at 1am.

Are there such things as virtual salespeople?

vangogh
10-28-2009, 02:01 AM
It wouldn't surprise me if there are virtual salespeople. Some virtual assistants might even do sales.

You could hire a couple of salespeople and train them so that when you sell the business they could continue selling for the new owners. That would be one way to remove yourself from being a necessary part. You'll have to deal with the time training the new people and maybe accept they don't sell as well as you do. On the other hand you could always find someone who sells better than you do.

If you had people selling for you, would you still want to sell the business? Is it the business you don't like or the selling? If the latter then definitely hire some people and train them so they can sell and you can run the business. And if you still want to sell in a couple of year you'll be in a better position to do that.

I'd still work on some training documents. You could use them for both sales staff and for anyone you sell the business to.

Steve B
10-28-2009, 06:22 AM
Of course a profitable business will be valuable to someone. You need to have all your processes well documented and you will need to be willing to consult for a period as part of the sale.

billbenson
10-28-2009, 11:26 AM
Its the intensity of the selling and the hours that I don't like. It's just a very busy and intense type of sales. I'm tired of 12 hour days 7 days a week. And its national and some international sales. Calls start at 8am Eastern and end at 6 pm CA time. After that there's all the followup.

vangogh
10-28-2009, 11:52 AM
Of course a profitable business will be valuable to someone.

Only if the business will still be profitable for the new owner. If the business right now only makes money because of Bill's unique skills that won't transfer to a new owner unless Bill comes along with the business. I would think others could be trained to do the selling and that Bill could create some documentation. If that happens then the profit could transfer with the business.

Steve B
10-28-2009, 12:03 PM
You must have missed the part where I pointed out Bill will have to consult for a while after the sale.

There are very few skills that are so unique that only one person in the country has them. If there is a track record of profit and a reasonable expectation of continued profit, then the business will be of value to someone. If some training, documented processes, and on-going consulting are included it will be very possible to find a buyer.

Note: I didn't say it would be easy to find a buyer, I didn't say ANYONE is a possible buyer, and I didn't say he can get any price he asks for. But, the answer to the question is, yes, it will have value and is sellable.

vangogh
10-28-2009, 12:34 PM
I did miss that. d'oh. That's what I get for replying before my morning coffee. :)

I'm with you that the business can sell. I think the key (other than it being a profitable business) is to make sure someone can take over and do the selling. I think someone could be trained. Selling is selling. The training needs to be about the specific product.

billbenson
10-28-2009, 12:47 PM
Thanks, Steve. I do realize that in some way, I'm going to need to come with the deal. I've been selling this stuff for 5 years or so and still don't know the product line in and out. The manufacturer has some customer service reps that get factory training that are fairly new (1 year or so). I frequently know the product better than they do. They also have some very knowledgeable customer service reps. Its a massive product line with a complicated product further complicated by OSHA compliance.

Maybe I should build it into a "real" company. Thing is, I like working as a one man show. It's just the hours that really get to me.

Spider
10-28-2009, 01:31 PM
Sounds to me like you are sitting in a goldmine, Bill, (you mentioned high margins) chipping away with hammer and chisel (one person working 12 hrs/day) when you need some mechanical mining equipment (a company structure.)

Of course it's sellable - anything that makes money is sellable. At the moment, though, you would only be able to sell it for what it's worth as a one-man operation. The potential is usually not worth much in the selling price.

Here's a snag. The sort of person who has any substantial sum with which to purchase a business has already been successful to have that money available and is not likely to part with it for a business that is going to have him working harder than he already is. And he's probably not working 12 hrs/day 7 days a week. So you will be looking for buyer who has insufficient money to pay a substantial price.

It's likely the business will not sell, as it is, for any amount you would consider selling it for. 1) because the buyer isn't there; and 2) because the value isn't there.

It is clear to me the busines must be shaped into something more resembling a "bricks and mortar" business, with employees, etc. if you will want to sell it for anything approaching it's potential value. IOW - you will have to capture some of that potential so you can include it in the selling price.

A corollary to that is get in touch with someone who creates franchises and turn it into something that can be franchised. If you are serving one or two highly technical companies, there must be other highly technical companies that could use such a service.

The alternative - and the route I would be inclined to take - is work the bejesus out of it for a year, document the selling procedures and processes (as others have advised) and sell it quickly for whatever a buyer can afford (= a lot less than you hope) but free and clear with minimal back support. Or, you could sell the business for a small lump sum and agree to be hired as a consultant for a percentage of income for as long as the buyer wants.

There will no doubt be other strategies that will work, but the above seem to be the most obvious.

vangogh
10-28-2009, 02:33 PM
The sort of person who has any substantial sum with which to purchase a business has already been successful to have that money available and is not likely to part with it for a business that is going to have him working harder than he already is.

Good point. That's the part that's the hard sell. It is possible someone who loves selling would buy the business, but more likely the buyer won't want to be doing the selling.

Bill I'm guessing the product doesn't sell without the phone call. I take it people won't buy directly from the site. If it's possible they would that could be another way to take yourself out of the business. Even if some people still need to call if you can sell to some directly through the site it will make the business more attractive to buyers..

Harold Mansfield
10-28-2009, 03:38 PM
Selling a business that is highly dependent on you is tricky since the current value of the business is based on you working it.

However, I assume that this industry is not an island and other people and companies are in it and in that case you have a lot of things working in your favor:

It's already established. It generates leads (this is a big one. lead generation is huge in any industry). Potential for growth is good.

If you were to sell, you would get you best price from a competitor. Plain and Simple.
Second would be a professional salesman who has worked with a similar product,or at least has construction experience.

It's a tight knit group that would know what to do with it, but to that group it should be worth it.

billbenson
10-28-2009, 04:37 PM
Spider, good post. Everyone is pretty much confirming what I was thinking. VG, that's pretty much correct. Had an online order for 8K last week, so it does happen, but because of the technical nature of the product it usually comes down to a consultive phone sell.

Eborg, I think you are correct that a competitor would probably be the best chance. I really don't want to explain what I do to my competitors or they could try to reverse engineer what I am doing.

Maybe I can cut down on the work load by farming out web design and getting a virtual assistant. VG, don't be surprised if you get a pm or email from me :)

vangogh
10-28-2009, 05:49 PM
Feel free to PM or email anytime.

If you can take some orders online maybe you can work a little to get more. The more you can take through the site, the more it does remove you personally from the business. Same for getting a VA and maybe some additional salespeople.

You may end up finding you like running the business once you take yourself out of it more.

Evan
10-28-2009, 11:32 PM
I really don't like what I do, but its starting to make quite a bit of money. Here is what I do:


Website that sells a construction related equipment. Expensive stuff.
I get about 15 to 35 phone calls a day for quotes, questions etc. At least that in emails as well.
I'm the only person, so I spend 12 hours a day playing salesman and extra hours and weekends with with web related stuff.
A lot of my leads come from Adwords. Others are from natural SERPS. All leads are web related


I'm thinking about selling it in a year or two, not today, but will it have any value?

The problem is, it makes money because of me. I don't want to go to competitors because they could just pick my brain and say no thanks. It's a highly technical product and would take someone somewhat technical about a year to get a feel for it. They would also need some sales skills to make a success of it.

I think its plausible to have 500k in sales in a year or two. No overhead, high margins so it could be bringing in some reasonable money. But is something like this sellable?

If this isn't something that is "generic" enough that could be replicated by anybody, I do see some difficulty initially being able to sell this.

FOR EXAMPLE: A dentist generates 1M in revenue from his patients. He is about to retire. Is this business worth anything? MAYBE. He has the location, client base, and brand already going, but not just anybody can be a dentist. And even if you find another dentist, you want to make sure they are of the same caliber, otherwise your former client base will flee. Certainly all of those details are worth something, but let's face it a new dentist won't make 1M unless they keep everything the same. (Inevitably you'll lose some because it isn't the "same guy").

This creates a challenge as you need to bridge this gap. Meaning, there needs to be a transition of ownership in order to create the most effective way for you to realize "OK, I'm not going to be doing this, but this is ____, and he's going to be handling this from on." That one-on-one tends to provide at least a bit of assurance that you have their blessing, and usually it helps establish some trust.

I'd also seek the advice of a CPA in order to create some type of proforma income statements for future years. Though it is important to remember that past performance does not guarantee future performance.

yoyoyoyoyo
11-29-2009, 01:08 PM
Evan's got it right on with the dentist example.

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And let's analyze where the real worth of your company is at the moment (which you pointed out already): your wealth of knowledge... that consultative sales call that makes the difference between whether you contract a sale or not.

Now, let's say your project is making positive cashflow every month, consistently: this is Real, demonstrative value.

if something can be valued, it has either the capacity to appreciate (or decline), is quantifiable/tangible, and can be sold.


But in order for you to part with this company, or sell it: you're going to have to find a way to institute a means for someone to handle the daily tasks of your business, so that that investor who comes along, finding worth in your business realizes the positive potential, and knows that he's not going to have to spend more hours in a day than he has time for, working a job... when he can be looking at other things/projects to invest in. And thus become richer.


There's a very popular axiom, which I like, and it goes like this: 'you don't want to work In your business, you want to work ON your business'

You're working too much IN your business right now, and not so much ON your business.

But then again, if it truly takes a year, or a few years to become incredibly educated or familiar with the products you sell; factor that in at the time of sale, and appropriate for that.


From a business perspective: what i'd do is hire an Indepent Contractor to accept an agreed to commission on sales, to handle the aspects of your company that are making you work more In your business than ON your business.

Sounds like the Sales Rep. job you created (and now work in, on your businesses behalf) is a role that can be actively filled by another person, allowing you to focus on even more ways to build your business to even greater heights... in terms of Exposure, Branding, Marketability, Forming Better Relationships with Customers (beyond the sales calls/contracting of services); allowing you to focus on these things, which are going to make you even more and more money- over a period of time, which'll, in turn, appreciate the worth of your company.

---

Also, you're saying that in another two years, you could quite possibly amplify the worth of your company to 500k by time of sale?

That means, that in another two years, you see your company making making a consistent $20,833 per month? [allowing for 24 months of a return on investment]

I can see no reason why you'd have any trouble selling your company, but if you're trying to sell an investor a job for 500k forget it. The employee/salesman must be included, somehow, in that overall package... or else your only better alternative is to sell to a guy in the same industry that you're currently in, who has that kind of cash.

And something tells me, if he's in your same industry- he already has much of your own knowledge (minus net-marketing skills)- has access to the same suppliers [perhaps has better relations with them, and makes a better profit], and just hasn't moved himself online yet.


So you see, there are some dangers- or pitfalls you should avoid (as you've already come to notice) when figuring out just how and in what way it's gonna' make sense for you to enable someone to free up your time and, ultimately, make your business worth selling to an investor.

'Cause that investor isn't gonna' wanna' work the way you do. That investor goes out and looks for things to invest in. Not for jobs to fill his time with.


Just some thoughts.