When the winds of old age and ill health howled through the sails of the Solitary Sailor's boat, he knew it was time to get to port, and get there fast. You see, his boat was his business. It was his sole source of support. And – this was his real concern – he was the sole support of his business.
This Solitary Sailor, Jason O'Salt (not his real name), grew his business for fifteen years. Annual revenue flowed in at about $390K. After expenses and taxes, he kept about $190K. The business he was keeping well afloat wasn’t actually a boat. His business represented service providers – like roofers, plumbers, and landscapers – to commercial and residential property owners. Many of the service providers were also Solitary Sailors who used Jason as their “Sales Department”.
Jason maintained one-year contracts with half of his service providers, but the rest were handshake
relationships. His business assets consisted of a truck and some office equipment totaling about $25K.
As he was getting older, Jason wanted to become a landlubber, retired from the sea of business. But he was convinced that his business didn’t have value without him at the helm. He did not want to go to port and leave his providers and customers in a dead sea. He had loyalty for them just as they had had for him over the years. Jason felt his only recourse was to hang on for dear life and eventually go down with the boat.
He thought, should ill health forced him to retire, that the most he could do was sell his equipment, inventory, service truck, and tools.
At the urging of a friend, Jason contacted a local business broker. At his first meeting with the broker, they discussed the assets of Jason's business. Jason was surprised to learn that the real value of his business resided in the intangibles. As an ongoing operation, these intangibles could be identified, quantified, and sold to a new owner.
Intangibles of a business have value
- full history of diverse customers
- detailed information on service providers and suppliers
- predictable revenue stream based on history from repeat business
- the service's trade-name and trademark
- domain name and website
- and, quality control processes for each service provider.
As he sailed back out to sea, for one last voyage, Jason took the map he and his business broker developed. This map plotted out a 12-month Retirement Strategy to:
- swab up accounting
- put service providers under contract
- develop a financial retirement plan
- write a process manual of methods and activities
- and, create a profile of the potential buyer.
When he came back into port, now ready to sell, his business broker began to market the business to potential buyers. Together, they quantified acceptable terms for the sale and developed a post-closing transition plan.
The business sold to a new Solitary Sailor for $380K with an SBA guaranteed loan.
With pride, and some relief, Jason stood on the pier with his wife watching as the new owner sailed a freshly painted boat out into a sparkling sea.
Yes, a Solitary Sailor's business can be sold!
But here are some common items of value your business might offer:
- forms and procedures manuals
- supplier lists
- customer lists
- trade names and logos
- domain names, website, and content
- orders and production backlog
- trade secrets and copyrights.
Consider your own business and its value.You might be a Solitary Sailor, or one with just a few mates, but your business might have tremendous value for a new owner.
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