BromsMods Posted March 18, 2010 Share Posted March 18, 2010 I am not getting any younger (it's a pity time doesn't go backwards!!) and with several health problems I am seriously considering selling this business. Since I started it 6 years ago it has gradually taken more and more of my time and, though the government seems to think I'm making a reasonable profit (from the tax bills I receive) all of it is currently ploughed back into the business. Unlike other web retailers our web site isn't just a shop, though - in fact the shop part was never part of the plan originally. I just wanted to provide some information for others that wasn't easily accessible, either at the time I started the site or even now, and there is no charge for this, though it takes time and money to supply it. It was only continual questions about the availability of products that stimulated the retail part of the site. I haven't had any time to do any railway modelling for myself for several years and I want to see something productive with all my investment in the layout (which doesn't exist yet!) before I pop my clogs!! Selling an internet business might not be as straightforward as a business with a shop front, so if anyone has any (constructive) advice (or wants to make a realistic offer!!) I would welcome any pointers. Thanks in advance........... Link to post Share on other sites More sharing options...
Kenton Posted March 18, 2010 Share Posted March 18, 2010 Selling an internet business might not be as straightforward as a business with a shop front, so if anyone has any (constructive) advice (or wants to make a realistic offer!!) I would welcome any pointers. Having been involved in the valuation and sale and some of the negotiations for the sale of some businesses (including 2 of my own) during my days as a tax accountant, the main recommendation I can give you is find out if your accountant has any knowledge and experience and then consult someone who has the experience. It, sadly, hardly ever goes as well as the seller believes it should. The seller (I include my self in this generalisation) rarely has a clue as to what the business is really worth often inflating the value of good will and transferable knowledge. Fortunately, some of the buyers also are very naive and come new to a business without the skills and knowledge let alone financial backing. As far as websites are concerned the consensus usually is that anything that exists on it is relatively of no value in the commercial equation. However, the domain name and, more importantly the business that it generates, certainly is of value (good will). But this is very difficult to value as the buyer will probably make significant changes to what is essentially an advert. I wish you good luck, but try not to take your eye off the ball while you are negotiating. Link to post Share on other sites More sharing options...
BromsMods Posted March 18, 2010 Author Share Posted March 18, 2010 the main recommendation I can give you is find out if your accountant has any knowledge and experience and then consult someone who has the experience. Many thanks for the comments. The answer to this question is no, I've already tried that avenue! Link to post Share on other sites More sharing options...
Kenton Posted March 18, 2010 Share Posted March 18, 2010 Many thanks for the comments. The answer to this question is no, I've already tried that avenue! That's a pity - most basic small business accountants should at least know of someone. But I would caution using one of the "sales agents" that claim to help. Again if you go down that route get a recommendation from a party you can trust. Many of these "we will sell your bisiness" types who advertise in the press and yellow pages are a bit like a breed of vultures. It is though, such a sensitive subject it is like plucking a valuation out of thin air. I would guess that your stock levels are minimal so play little part in the equation. Typically valued at cost - 10% (but beware redundant stock) the buyer's accountant will probably try to knock that % back to 25 - 50%. If you have negotiated special deals with suppliers (stock only) then that should be added to good will. The calculation of good will is always a debatable point and the tax implications are opposed for each party. There are some pretty good guidelines for most business, again the accountant should have these figures. They usually revolve around three things 1) the average profit of the business over the past 3 years; 2) the profit / (return) customer ratios (if the business is dependent on a few customers then the good will has a high risk of vanishing with the previous owner); 3) the return on capital invested (actual and virtual) - ie if you walk away with all the capital and knowledge in the business the new owner may not be able to provide this. Oh and it must be defined as a "going concern" - basically if joe smith started the business with the same investment tomorrow (not buying your business) could he be expected to have the same profit in a year as if he had bought it. Good will must provide an advantage. Oh and I forgot to add there can be horrendous complications if the business is a Ltd Co, has significant assets, employees and pension responsibilities. Link to post Share on other sites More sharing options...
BromsMods Posted March 19, 2010 Author Share Posted March 19, 2010 I would guess that your stock levels are minimal so play little part in the equation. Not in our case - stock is most of the value of the business. I could open a small retail shop tomorrow and fill the shelves without buying in anything!! We've also seen a growth in sales year on year since we started, even during the current recession, with sales in our last financial year increasing by more than 15%. Oh and I forgot to add there can be horrendous complications if the business is a Ltd Co, has significant assets, employees and pension responsibilities. Fortunately none of those apply in our case. Link to post Share on other sites More sharing options...
BromsMods Posted January 4, 2011 Author Share Posted January 4, 2011 Well the decision has finally been made and an ad will shortly appear................ unless anyone wants to get in first!! In the meantime we will still be trading as usual......... Link to post Share on other sites More sharing options...
windmills Posted January 5, 2011 Share Posted January 5, 2011 John, Really sorry to hear that you are selling the business. You will be sorely missed! If the new owner can come anywhere near your standards of service he/she can expect to prosper. Thanks for your customer care over the years. Brendan Link to post Share on other sites More sharing options...
Allegheny1600 Posted January 5, 2011 Share Posted January 5, 2011 John, You have certainly provided a great service to many of us over the years - the new products you brought in were excellent and innovative! I can only wish you well with the sale and hope you have a long and happy retirement. Cheers, John E. Link to post Share on other sites More sharing options...
RMweb Premium Pannier Tank Posted January 5, 2011 RMweb Premium Share Posted January 5, 2011 Thanks for the excellant service John, let's hope it continues with the new owner. Good luck for the future. Link to post Share on other sites More sharing options...
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