Selling my business advice required

D

donnakebabnew

Hi All i would really appreciate some advice. I set my home based business up 10yrs ago business was doing great with a net profit of 22-30k. We moved home approx 3 years ago and had a renovation done so i took my foot off the pedal. my net for 2016 and 2017 was 15k clearly shows where i have made no effort and put in approx 1 hours work a day rather than the normal 3/4 hours a day i used to. Ive in the meantime set up another business which is doing well and my enthusiasm for my other business is sadly gone and i have no drive for it. This year 2018 im running a loss. im now 10k overdrawn in my business account and i just cant get the drive back for continuing my business and am thinking of selling it now. I had someone come out to see me from a company to value my business and he valued it at £29k.

The business has so much potential with approx 8k worth of stock. Its an online business that can be done anywhere in the UK and has potential to increase oversea sales etc with the right person willing to invest their time and love into it.

What i would like to know is is this valuation correct?

Many Thanks
Donna
 
It's impossible to agree a valuation on the very limited information you've given, but your implication is that the business is running at a loss... you've lost interest.... so the only real value to you is the stock.
Every business offered for sale will be deemed to have potential.... it's totally unsaleable otherwise.

I would suggest accepting any offer for the whole business (inc stock) which would settle the overdraft, or even just the value of the stock. Move on to the new business which you say is doing well.
 
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D

donnakebabnew

It's impossible to agree a valuation on the very limited information you've given, but your implication is that the business is running at a loss... you've lost interest.... so the only real value to you is the stock.
Every business offered for sale will be deemed to have potential.... it's totally unsaleable otherwise.

I would suggest accepting any offer for the whole business (inc stock) which would settle the overdraft, or even just the value of the stock. Move on to the new business which you say is doing well.


Thank you for you reply which is much appreciated. Do you know where the best place to sell would be?

Regards
Donna
 
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Thank you for you reply which is much appreciated. Do you know where the best place to sell would be?

UK Businesses for Sale https://uk.businessesforsale.com/ used to be very good, but make sure you differentiate yourself from the plethora of 'online businesses in a box' sellers.

Dalton's Weekly suffers from the same problem, but a good port of call for anyone looking for a small home based business.
 
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Mr D

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Perhaps worth just a percentage of the stock total.

Maybe a grand or two.

Realistically an online business is worth what someone else is willing to pay for it. If you had kept your eye on the ball and had good profits then maybe it would be worth more as a job to someone.
There isn't a standard way of valuing a business and a chunk of those businesses put for sale will still be unsold months or years later.
 
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D

donnakebabnew

Thank you for talking the time to respond to my post. What about a business partner? Someone who invests their time to try and turn the business around again? Is this such a thing and appealing to someone?
 
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Mr D

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Thank you for talking the time to respond to my post. What about a business partner? Someone who invests their time to try and turn the business around again? Is this such a thing and appealing to someone?

Yes that could be done.
Would suggest if you go down that route you have a partnership agreement with whomever. The forums has more than a few instances of partnerships where things go wrong.
 
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Thank you for talking the time to respond to my post. What about a business partner? Someone who invests their time to try and turn the business around again? Is this such a thing and appealing to someone?

You mean someone prepared to put time and effort to recover the ground you have lost, get your overdraft paid of BEFORE they get any reward for their enterprise? Your OP mentioned 'time and love' - A business partner would certainly need that, and as @Mr D says, most certainly a partnership agreement.

But all the while the overdraft is accruing interest..... don't delay.
 
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Clinton

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    I had someone come out to see me from a company to value my business and he valued it at £29k. What i would like to know is is this valuation correct?
    Throw the valuation away. It's probably from a broker like Intelligent Business Transfer, or Turner Butler, or KBS. Here's how most brokers at the bottom end of the market value businesses.

    Thank you for talking the time to respond to my post. What about a business partner? Someone who invests their time to try and turn the business around again? Is this such a thing and appealing to someone?
    You're grasping at straws. You want someone to rescue your failed project? Don't waste good money after bad trying to find unicorns.

    Bite the bullet, close the business down, sell the stock for whatever you can get for it.
     
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    serendipitybusiness

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    There is no way I would pay 29K for a business running at a loss regardless of the history. Even if the website is good, serps are good and it had a built out advertising campaign that was turned off I doubt I would pay anymore than a couple of grand and that would be a punt. I would only look at it if it had potential and was a relatively easy flip.
     
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    Chris Ashdown

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    First thought just close the business and sell the stock

    Second find a retired person to take over the running of the site, all sales profit goes 50/50 between you both, walk away after original stock sold

    Few places will give you more than 10|% of cost for stock unless its easy sold and in the right numbers breakdown of stock
     
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    Bite the bullet, close the business down, sell the stock for whatever you can get for it.
    This is your ONLY realistic option! Sorry, but that's the way it is!

    90% (my guesstimate) of small online businesses are not worth a bucket of warm spit - because -

    1. They depend on their owner for everything, contacts, web-build, packing and admin, you name it and the owner has to do it and is the only person who knows how the thing runs.

    2. They have no equity. Buildings and land, intellectual property such as patents and key knowhow, significant market share, exclusive contracts - that is all equity.

    3. There is no such thing as customer loyalty and very little branding in an online world. An Amazon shop, an eBay shop - they come and they go like the snows of Winter.
     
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    Pish_Pash

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    This is your ONLY realistic option! Sorry, but that's the way it is!

    90% (my guesstimate) of small online businesses are not worth a bucket of warm spit - because -

    1. They depend on their owner for everything, contacts, web-build, packing and admin, you name it and the owner has to do it and is the only person who knows how the thing runs.

    2. They have no equity. Buildings and land, intellectual property such as patents and key knowhow, significant market share, exclusive contracts - that is all equity.

    3. There is no such thing as customer loyalty and very little branding in an online world. An Amazon shop, an eBay shop - they come and they go like the snows of Winter.

    That sounds remarkably like me!

    As it goes, due to me being completely hacked off with the amount of time my small online business takes (with no support from anyone) ...& with no realistic way out, it's looking very like I'll be selling the stock & winding down (ironic becaring in mind my turnover is almost £0.5M, with me earning over £100k per annum (by way of profit (divis) & salary).

    Anyone want to buy a bloody good business...oops my bad, I mean job?!
     
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    Pish_Pash

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    The sensible thing to do is to hire a small space and employ someone to do the donkey work!

    I Live in London...hire of a small place probably in the region of £20k, hiring someone to do the donkey work won't be cheap (even donkeys are high maintenance in London)...also I really don't want to be an employer (pensions, holidays, sick, HR issues, NI, PAYE eeeugh)

    the sensible thing to do would be to get the hell out of London ...my other director (aka my estranged wife) doesn't buy into that idea.
     
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    Pish_Pash

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    Then get rid of the other director by either buying her out or selling the company off to her - either that or you two have to get back together again!

    We are in danger of hijacking someone else's thread, but if I buy her out...she'll still get 50% of my subsequent income/earnings (via maintenance) ...she won't be able to buy the business off me ...currently she packs stuff (erhm that's it). Better to either sell the business to someone else (unlikely)...split the proceeds & bid her farewell & "good luck", or (more likely) sell the stock, wind the company down, split the proceeds & bid her farewell & "good luck".

    Whatever happens though...I'm not continuing to work like a donkey while she does (relative squat - apart from spending the income quickly!) ...so it's one of the two options mentioned above....shame that small online businesses have no value - it needs more prominence on the tin at the outset!
     
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    Clinton

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    ... over £100k per annum (by way of profit (divis) & salary).
    I know you and I have had this conversation about OMBs being jobs, but with £100K in net it's probably worth giving it a shot and trying to find a buyer.

    This is especially so if you're willing to provide a long handover ...and an even longer period to support all that custom code and stuff you've created! Any deal would likely involve a chunk of earn-out as well.

    And earn-out ain't good news when it comes to an ex-wife situation 'cause her Ancillary Relief (financial settlement) will likely only look at the headline price. Get a good adviser - if you find a buyer for the business there are many creative ways to structure the deal ;)
     
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    Pish_Pash

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    I actually have a couple of options before winding the stock down...

    1. See if one of the companies I presently supply would like to buy mine (I have exclusivity on a good brand - albeit gentlemen's agreement but they'd not waivered in the 8 years I've dealt with them, they've stood behind me all that time ...I could probably get the gentleman's agreement tightened up & into writing) ...I'd imagine some of the companies I supply might be interested...but almost not at a price I'd want to see though!

    2. Sell the business with the headline 'established Amazon Supplier' ...this is a shoe in for anyone that has products that they would like Amazon Retail to buy (Amazon Retail will buy anything from their existing suppliers so long as the quoted price is agreeable) ...the sky's the limit for someone running with this that has enough nous to source products that are sought after.

    3. Approach the (overseas) brand & see if I can be his UK agent instead - i.e. a sort of a pseudo employee (i.e. mainly his 'UK presence' for him (the Brand) to supply Amazon, I handle all the import, getting it to Amazon, invoicing etc - I skim a percentage). This way I have no risk...the brand carries all the risk...this removes my stress & should see a much better work/life balance. (which is my main issue) ...I fear that Amazon may ultimately offer him this direct though.

    if those options fail...

    4. Wind the stock down & extract the cash pile.

    truthfully, mine is a great business (profits are likely to grow very well from this -already good - level, for example, the brand has just become 'Brand Registered' with Amazon meaning they can get parallel grey importers kicked off Amazon UK - meaning pretty much Amazon Retail UK will get all the sales - I supply Amazon Retail, so all Amazon UK sales for the whole Brand will be via me ...kerching) ...but a marital failure has knocked the wind out of my enthusiasim ...compounded by the fact we were a husband & wife director team - far from ideal. If someone with some renewed gusto took it over, the growth could be astonishing....but yes, I still appreciate that I'd be selling a job....& that's a tough sell.

    Apologies to the OP ...but listen to the Byre & Clinton ...sell your stock & forget about any inherent value you think there may be.
     
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    Number three might be your best bet. That sounds like a classical sales agent and allows you to take on other products that do not compete with what you have already - that's all down to contracts of course!

    Given your track record, the present supplier should be fairly amenable to the idea.

    EDIT: I would still work on trying to make this into a 'proper' business that is not dependent on you for everything.
     
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    Flankaaa

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    It is really impossible to provide good advice on how to proceed further. Only thing that is on my mind is question why did you try to diversify your business and spread your focus on several sides, ending with no effort in any of businesses? Only you can answer that question
     
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    JamieM

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    Whilst there don't appear to be any on here, there are buyers out there for small ecommerce businesses. I have sold four on businessesforsale.com - it's worth a go if you put in the time to present it well and don't go crazy on value. Mine were asset sales and we simply sold website + stock at valuation for approximately 1.5 x profit. Businessesforsale.com also have a free trial so you can see what interest you get before paying the fee.

    I Live in London...hire of a small place probably in the region of £20k, hiring someone to do the donkey work won't be cheap (even donkeys are high maintenance in London)...also I really don't want to be an employer (pensions, holidays, sick, HR issues, NI, PAYE eeeugh)

    Why don't you outsource your order fulfilment?
     
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    Pish_Pash

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    Whilst there don't appear to be any on here, there are buyers out there for small ecommerce businesses. I have sold four on businessesforsale.com - it's worth a go if you put in the time to present it well and don't go crazy on value. Mine were asset sales and we simply sold website + stock at valuation for approximately 1.5 x profit. Businessesforsale.com also have a free trial so you can see what interest you get before paying the fee.

    With respect to selling my particular business, there are likely to be a few challenges...

    1. I've honed it to the point to be as efficient as possible (to save having to employ people)....putting the products that I import/sell to one side, my business is essentially an MS access database with a LOT of coding behind it ...I personally did the coding. So unless a potential buyer happens to be sh1t hot with VBA, then he's going to have to consider migrating to an off-the-shelf solution (& employing people)

    2. Becuase I don't employ people - even though I run a slick operation - there's a big drain on my time...it's wearing thin after several years...any new owner will need to consider his life/work balance (or employing people!)

    3. My turnover is £500k (a tad under actually ) ...we (me & my estranged missus) take approx £8.5k salary (therefore £17k in total)...this leaves £100k net (pre tax) profit. After corp tax, that's about £80k to be distrbuted as divis....so in essence, for a husband & wife team, they can have almost £100k income if they buy my business....trust me, I'm not about to sell that for pennies....and most 'target buyers' don't have a lot of cash sloshing around to make me think the blood sweat & tears expended was worth it!

    4. I have 'gentleman's exclusivity' on one brand (indeed the only brand I work with) ....they've not reneged in the 7yrs I've worked with them....they may never, but they could....that means my business is built on sand.

    5. The guts of my income comes from selling to Amazon (as their supplier) but also selling on Amazon as a seller...again...this is flakey.

    So I find myself in a peculiar situation...I've probably grown bigger than a one man band ought to have (ok, 1.5 man band if you include the little bit that my estranged wife contributes) ...but this has come about through sheer hard work (long hours over several years) & a bit of hanging on behemoth that is Amazon's coat tails ...I've probably outgrown what most potential buyers (i.e. another 1 man band) would be prepared to pay ...so I'm stuck in eternal Limited Company hell (albeit one that pays well)....or face the prospect of saying "to hell with this ....I want my life back" & just selling off the stock & implementing an MVL.

    So unless there happens to be a VBA coder (with an unemployed wife) out there who are both prepared to work long hours (where the sky's the limit) for a decent income ...then I'll struggle to sell my business (which stings, becuase it's actually a great/healthy business...it just needs someone fresh to keep it growing)
     
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    JamieM

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    1. I've honed it to the point to be as efficient as possible (to save having to employ people)....putting the products that I import/sell to one side, my business is essentially an MS access database with a LOT of coding behind it ...I personally did the coding. So unless a potential buyer happens to be sh1t hot with VBA, then he's going to have to consider migrating to an off-the-shelf solution (& employing people)

    2. Becuase I don't employ people - even though I run a slick operation - there's a big drain on my time...it's wearing thin after several years...any new owner will need to consider his life/work balance (or employing people!)

    VBA for what processes?

    If The Byre is correct that you have outsourced your order fulfilment then I don't know what is taking up so much of your time. My ecommerce business + over 1000 wholesale customers hardly takes up any time and it could grow 500% and not require many more hours.

    How many product lines do you have?
     
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    dan19900

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    With respect to selling my particular business, there are likely to be a few challenges...

    1. I've honed it to the point to be as efficient as possible (to save having to employ people)....putting the products that I import/sell to one side, my business is essentially an MS access database with a LOT of coding behind it ...I personally did the coding. So unless a potential buyer happens to be sh1t hot with VBA, then he's going to have to consider migrating to an off-the-shelf solution (& employing people)

    2. Becuase I don't employ people - even though I run a slick operation - there's a big drain on my time...it's wearing thin after several years...any new owner will need to consider his life/work balance (or employing people!)

    3. My turnover is £500k (a tad under actually ) ...we (me & my estranged missus) take approx £8.5k salary (therefore £17k in total)...this leaves £100k net (pre tax) profit. After corp tax, that's about £80k to be distrbuted as divis....so in essence, for a husband & wife team, they can have almost £100k income if they buy my business....trust me, I'm not about to sell that for pennies....and most 'target buyers' don't have a lot of cash sloshing around to make me think the blood sweat & tears expended was worth it!

    4. I have 'gentleman's exclusivity' on one brand (indeed the only brand I work with) ....they've not reneged in the 7yrs I've worked with them....they may never, but they could....that means my business is built on sand.

    5. The guts of my income comes from selling to Amazon (as their supplier) but also selling on Amazon as a seller...again...this is flakey.

    So I find myself in a peculiar situation...I've probably grown bigger than a one man band ought to have (ok, 1.5 man band if you include the little bit that my estranged wife contributes) ...but this has come about through sheer hard work (long hours over several years) & a bit of hanging on behemoth that is Amazon's coat tails ...I've probably outgrown what most potential buyers (i.e. another 1 man band) would be prepared to pay ...so I'm stuck in eternal Limited Company hell (albeit one that pays well)....or face the prospect of saying "to hell with this ....I want my life back" & just selling off the stock & implementing an MVL.

    So unless there happens to be a VBA coder (with an unemployed wife) out there who are both prepared to work long hours (where the sky's the limit) for a decent income ...then I'll struggle to sell my business (which stings, becuase it's actually a great/healthy business...it just needs someone fresh to keep it growing)

    Try EmpireFlippers it's just IIRC $300 to list and 15% if it sells, they'd probably value it at 4-500k, pretty sure it would sell fairly easily to be honest.
     
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    Mr D

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    VBA for what processes?

    If The Byre is correct that you have outsourced your order fulfilment then I don't know what is taking up so much of your time. My ecommerce business + over 1000 wholesale customers hardly takes up any time and it could grow 500% and not require many more hours.

    How many product lines do you have?

    Wow.
    Nice if you can get to that point.
     
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    @Pish_Pash (a dish I occasionally make!) The real problems are -
    • You have one customer
    • You have one supplier
    • You run everything using VBA.
    Those three things (and possibly some other things) need to be fixed before the company can be easily transferred to another owner/manager.
     
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    Pish_Pash

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    @Pish_Pash (a dish I occasionally make!) The real problems are -
    • You have one customer
    • You have one supplier
    • You run everything using VBA.
    Those three things (and possibly some other things) need to be fixed before the company can be easily transferred to another owner/manager.

    Very close, but no cigar :) ...
    • I have over 13,000 NEW customers per annum via Ebay, my Website & Amazon FBA customers (but with one customer - Amazon Retail - who brings in a significant percentage of my turnover/profit)
    • I have one supplier ...agreed, this is very thin ice (but like I say, he's stood behind me for 7 years & has offered to tighten agreements up in writing)
    • I run everything using VBA ...not sure that this is a downside, a typical business is a collection of disparate systems ...at least my systems are all integrated, bespoke (perfect for the taks in hand) & all pulling in the same direction (Stock forecasting, Invoicing, Ebay / FBA customer order APIs, Amazon Retail POs, all auto piped to Accounts etc.)
    I guess the nub of my problem is that my wife (now estranged wife!)...didn't pull her weight & as the marriage fell apart (in slow motion) it got worse & worse.

    My business really is a two man business ...furthermore this business needs two savvy people who compliment each other, vs one semi-savvy-ish person pulling a lump of dead weight. It can be run with one person....but it'll make his/her life miserable, as it will sump his/her time outrageously.

    VBA for what processes? If The Byre is correct that you have outsourced your order fulfilment then I don't know what is taking up so much of your time. My ecommerce business + over 1000 wholesale customers hardly takes up any time and it could grow 500% and not require many more hours.

    Answering customer enquiries, invoicing B2B (B2B orders are a real labour drain vs Ebay/Amazon orders), shipping stock in bulk (to Amazon FBA ....& to Amazon Retail), packing individual Ebay orders ...but the biggie, is keeping on top of the sheer volume of accounts (FBA reconciling, Ebay reconciling, HSBC Bank reconciling, Amazon Retail reconciling ...each one is very different & quite a time sump)
     
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    JamieM

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    Answering customer enquiries, invoicing B2B (B2B orders are a real labour drain vs Ebay/Amazon orders), shipping stock in bulk (to Amazon FBA ....& to Amazon Retail), packing individual Ebay orders ...but the biggie, is keeping on top of the sheer volume of accounts (FBA reconciling, Ebay reconciling, HSBC Bank reconciling, Amazon Retail reconciling ...each one is very different & quite a time sump)

    Don't you use templates for common customer enquiries? Something like Gmail canned responses cuts down a lot of time.

    Why don't you have your B2B customers order on your website? All of our wholesale customers order online (except one).

    I would recommend fully outsourcing your order fulfilment. They can send ALL your orders and your stock to Amazon FBA. You can link your website and eBay so these orders (including B2B) are taken care of automatically. Then you only need to manually process FBA replenishment and Amazon Retail orders which shouldn't take long.

    I don't think accounts should be taking up so much time. You can easily have all your sales from Amazon, eBay and your website automatically linked in to your accounts software. Then you're only adding expenses and reconciling accounts. I only spend a few days per quarter doing our accounts and a lot of that is due to foreign currency accounting. You could even consider outsourcing your accounts to a bookkeeper as well.

    Obviously outsourcing your order fulfilment in particular will cost money but it will save so much of your time and make your business way more sellable. To consider shutting it down is madness.
     
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    Mr D

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    Don't you use templates for common customer enquiries? Something like Gmail canned responses cuts down a lot of time.

    Why don't you have your B2B customers order on your website? All of our wholesale customers order online (except one).

    I would recommend fully outsourcing your order fulfilment. They can send ALL your orders and your stock to Amazon FBA. You can link your website and eBay so these orders (including B2B) are taken care of automatically. Then you only need to manually process FBA replenishment and Amazon Retail orders which shouldn't take long.

    I don't think accounts should be taking up so much time. You can easily have all your sales from Amazon, eBay and your website automatically linked in to your accounts software. Then you're only adding expenses and reconciling accounts. I only spend a few days per quarter doing our accounts and a lot of that is due to foreign currency accounting. You could even consider outsourcing your accounts to a bookkeeper as well.

    Obviously outsourcing your order fulfilment in particular will cost money but it will save so much of your time and make your business way more sellable. To consider shutting it down is madness.


    Just out of interest what is the point in sending stock to a fulfilment service to send to amazon FBA?
    Appears to be duplicating work.
     
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    OK, let's go through this logically (and this follows a discussion with my wife about us buying your company and she vetoed the idea immediately, as it is not even peripheral to what we do) -

    VBA - So imagine that I were to buy your operation and I had to integrate it into the current structures. The three things I said were wrong, remain more or less wrong, starting with VBA - it ain't how we do things and any buyer would need to be able to integrate your business into their existing systems, be that slightly goofy GnuCash or a more adult SAP system. Farting about with spreadsheets and some boiled down version of Visual Basic for just one part of the business is really not an option.

    When I sold my news agency, one of the many things our advisor told me to fix was to get rid of my brilliant and remarkably simple article database. Our articles, tens-of-thousands of them, were valuable and one of the reasons we managed to get a good price for the company. I and my employees thought our dBase system was just 'triffic - but it was based all on Word Perfect/dBase-III and therefore could not be integrated into Quark-Xpress or Adobe, so out it had to go!

    One Supplier - One supplier is deadly! Trust me on that one. Back in 2000, I contacted a German company called SEH about selling their computers in the UK and could have been a good peripheral activity to what we do in the UK. Their prices were good, the quality was good and they could spec them up to have UK Windows and keys, etc. Everything was ready to roll and we knew them and had been selling their stuff in Germany for seven or eight years.

    Suddenly Poof! They were gone! Bang - disappeared totally, after a supplier had been caught selling smuggled CPU chips - the Finanzamt came to SEH as the next 'down-the-line' and demanded DM60m with immediate effect and despite being a healthy company with healthy profits and many employees, they had to do the old 'White-Eared Elephant'.

    Companies can and do vanish! One supplier has to become many suppliers.

    Customer Structure - @JamieM has already said it all, pretty much. One fulfilment centre should take all that crap off your hands and allows you to do more amusing and/or productive things. If I were to buy your company (see wife's veto above!) the very, very last thing I want to do is waste my time wrapping parcels and solving Amazon's loading bay problems for them! I'm looking for things that are either fun to do or give me a RoI.

    An investor is looking for things to invest in. People who are looking for a job do not have money and you need to find people with money or at least people who know how to integrate your company into their structures and are prepared to pay you from post-sale profits with a min. guarantee.

    And now for the rest of my grossly unqualified thoughts -

    Given the existing two-man structure, that £100k gross profit is whittled down to £20k-£30k gross profit, after employing two people to run the thing.

    I would be looking to add value by expanding the company into France and Germany with French and German websites and fulfilment.

    My 30 cents worth - keep the company and follow @JamieM's advice!
     
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    JamieM

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    And the fulfilment warehouse does the QA checks? And stores the right amount of stock, sending the rest on as required to the seller?

    Yes. The fulfilment warehouse stores all of your stock and sends out your orders from your website, eBay, Amazon or wherever. If you want to send stock to Amazon for FBA you just put an order through for them to send whatever you require.
     
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    Mr D

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    Stirling
    Yes. The fulfilment warehouse stores all of your stock and sends out your orders from your website, eBay, Amazon or wherever. If you want to send stock to Amazon for FBA you just put an order through for them to send whatever you require.

    Yes I know what a fulfilment company does. I am unclear who is doing the rest of the work.
     
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