Can I sell my business despite being a sole trader & having little to give but a client list?

[sallysqueak]

Hi all

I'm planning on ceasing my business as a dog daycare provider soon, as I've been offered a freelance job in an office which deals with graphic design (which is what I really want to get into).

I was planning on simply giving my clients notice and then stopping, but today I'm just wondering whether there is any potential for me to actually sell this business rather than just letting it die?

The thing is, I'm a sole trader. I don't have a company as such, so what can I sell? I have a website and FB/Twitter profile for the business. I work from home, the dogs come to me during the day and come home at night. I have a few very loyal clients, and get emails most weeks from people wanting to bring new dogs (which I cannot accommodate due to space restrictions and the practicalities of walking/looking after too many at once).

I don't use a van, the dogs come to me and I walk them locally with no vehicle needed due to where I live. So aside from a website, some social media pages, a few dog leads and a client list, I have nothing else to pass on physically to a buyer.

Do I have a business to sell here? If so, what sort of value would it have and where and how could I sell it? Would it need to involve solicitors, or could I simply sign the website and social media pages over to the buyer, along with the client list?

I estimate I currently make approx £1k a month from this.

Thanks in advance.

 

[Ashley_Price]

Hi @sallysqueak

In short, Yes!

Okay, you probably want a bit more than that.

If you can find someone who does a similar service as you then you can see if they would be interested in buying the list.

However, two things:

1. You cannot just hand over the clients to the buyer, you would need to contact the clients and let them know what you are planning to do. They might not be happy with the fact you are selling their details to someone else. You have to give them the opportunity of making the decision to go to the new business or not.
2. You may need to offer some "clawback" for the buyer, in case some of the clients don't go over to them. If they buyer thinks s/he is getting 100 new clients, but only 50 actually take up their service, they may come back and request some of their money be returned. (Some clients might decide to find a new service on their own, or decide that they don't need the service any more, etc.)

You will need to be able to show how much you are getting from the clients and while it maybe that the figure is too small for them to make a outright purchase, you may be able to work out a monthly commission with them (if you feel you can trust them to give you accurate figures). Doing a monthly commission would also avoid the need to offer clawback.

The above is what I did when I sold the call answering service back in 2012.

As for the website, etc., then there could be a value in it, because it could save the new person having to have a new one built (unless they plan to put the stuff into their own current site). That and the client list was two of the reasons why I purchased the office supplies business from someone rather then set up a brand new business.

 

[Clinton]

Assets:

Client list
Website
Social media accounts (and followers)
Mailing list (including emails of past clients and prospects)
Goodwill
Telephone number (that others have in the phonebooks)
Small quantity of equipment (perhaps leads, food/snacks, first aid kit etc)

How best to get value out of those assets? That's what I specialise in and advise clients on (though, I'll be honest, my fees would not be economical for you given the figures here).

Whatever assets you have you need to be presenting all the assets well if you want to extract maximum value.

It's not just competitors who'd be interested. There may be recent retirees or others in your area who're looking for a venture to get into and yours is the kind of size that would appeal to many of them.

Ashley makes some good points. One tip I give clients of mine in this type of situation is, if you're selling to a competitor, to consider calling it a merger rather than an outright sale. The difference is largely cosmetic in your case.

Your customers are more likely to stay if the business is being merged than if they are being "sold on" to someone else.

 

[justinaldridge]

When I sold my first business, which was a very personal service, I agreed with the buyer to work with me for a time so that the clients could get to know him before I transitioned myself out. The overlap period made it much easier for the clients to trust the new owner as I didn't just leave straight away.

You do have a business you can sell but it's dependent on the clients continuing with the new owner. How you bring that person in, build the trust with your clients and then hand over the reigns completely I think is key. Your clients trust you with their dogs so they will also need to trust the new owner.

Best of luck.

 

[Ashley_Price]

Ashley makes some good points. One tip I give clients of mine in this type of situation is, if you're selling to a competitor, to consider calling it a merger rather than an outright sale. The difference is largely cosmetic in your case.

Your customers are more likely to stay if the business is being merged than if they are being "sold on" to someone else.

That's a very good point and I admit I wish I'd thought of it in 2012, when selling the call answering service.

 

[Ashley_Price]

How you bring that person in, build the trust with your clients and then hand over the reigns completely I think is key. Your clients trust you with their dogs so they will also need to trust the new owner.

Yes, that is SO important.

I was very fortunate because I knew the business I was selling my service to, so I knew the clients would get the same (better?) level of service with the new firm.

But people's pets needs another level of trust altogether. You will really need to research the prospective buyers for your business (unless you actually don't care what happens after you've sold the business).

 

[Clinton]

That's a very good point and I admit I wish I'd thought of it in 2012, when selling the call answering service.

If it makes you feel any better I've made the mistake in the past and learned the hard way with some of the first businesses I sold. Now that I advise others on selling their businesses I come across various versions of this problem.

The main one, especially in the recruitment sector, is maintaining staff through the transaction. Customers are a concern, yes, but you can often lose half a dozen customers without major impact on the business. If a small business loses half a dozen staff that's usually a lot more serious, possibly fatal.

A good approach with staff is to disclose only what you have to disclose and only to the people who need to know. When the rest of the staff are brought into the picture it's best that the sale is presented as an opportunity - an opportunity to access the funds and talent the company needs to grow and which growth assures current employees not just of job security but career advancement prospects as well.

 

[AllUpHere]

A business like this is only worth what it would cost someone to start a similar business and get it into a similar position. In this case that value is very small.

Anyone wanting the clients could find their own with very little effort.

This type of business costs nothing to market and owns no assets, so has little value.

 

[AG Consult]

Could you not employ someone to do the walks and you retain the business ?