The Value of a client list & Business Name

E

ezragipson

New member
I received an unsolicited offer to purchase another detail business for
$25,000.00 . The business has been in existence for 8 years and has grossed about $50,000 a year. My question is should a client list cost this much and how can you charge so much when there is no guarantee that the clients will stick with the company once it has changed hands?
 
$50,000 a year isn't that much either. That is the kind of client list you could build with about a year of solid business builiding work. And there is absolutely no guarantee that the clients from this other guy will go with you anyway. If I were to sell my business to someone else I can guarantee that most of them would probably go somewhere else anyway. The relationship I have with them is a personal one that doesn't just transfer over to the next guy waving my banner. They know that I know what they like and there is a trust that has been established. Trust isn't something that is transfered. You have to earn it.

I don't know that a detailer who is willing to sell the names and numbers of his entire customer base is someone that has earned a lot of trust from his clients anyway. I'm sure lots of car theives would love to buy a list of cars and addresses for $50,000. I'll bet if you stole half of them you could tripple your investment. That is way too shady to even consider.
 
i have talked to a few business owners of different kinds of business and many say if someone wanted to buy their business, they would take the last years gross profit, and divide it in half, 50% for the equipment and 50%for the client list. $25,000 is alot more than i would be willing to pay ofr a list of contacts. maybe $5,000 would be worth considering but not any more than that.
 
If I already had all of the supplies and equipment that I needed, I could take $25,000.00 and build a $50,000.00 to $100,000.00 per year auto detailing business in the first year.

I would offer them $10,000.00 for everything. Smart Business 101 = Don't pay too much if you don't have too. If they accept, great. If they do not then you have $25,000.00 to build your business from the ground up.
 
Dwayne made some great points!

My father just sold his business after 25 years ... He sold his whole company (Turn key operation) But the person he sold it to only wanted the customer list! The biggest point my father made is you have to expect to loose about 25% of the clients on that list!

If you have 25k to invest into your start-up I think your off to an awesome start. Make the proper investments (Buy the right products, advertising, ect) One of the best things I think you can do is pick 4 or 5 of your friends and keep their cars detailed! As a start up ... word of mouth is great advertising and its CHEEP... Give discounts for people who spread the word!

Good Luck!
 
Unfortunately, my detail business isn't yet to the point where we have that kind of money to purchase a client list. The opportunity is very tempting though in that, there is a possibility that my clientele could grow rapidly overnight.

Does anyone have any other suggestions on how to go about making this deal happen? We thought that I could work side by side with him for about 6 months, to establish a relationship with his clients, giving him a percentage of the money from each job. After 6 months, I could be in a better position to determine if his clients would transition well to me or if I would lose a lot more by doing the deal. Does this sound like a good way to proceed?
 
Offer him less like Dwayne suggested but write into your deal that you will pay him in 3 installments to insure that his clients do transition over to you . This lets you review ever 4 months to see if its going to work.
 
I had this same opportunity when I was just getting serious about starting my business. I was told don't pay for someone else reputation when you have one thats better. Customers are not loyal. If he had $50k a year in accounts, that's a different story. Accounts are more stable then a single customer. I make a little more than half what I charge retail on a wholesale account but there's ALWAYS work. I could not do one retail detail and still make a good living on my accounts. Make sure you have him sign something saying he can not do details with in 30 miles of his house.
 
Jngrbrdman said:
$50,000 a year isn't that much either. That is the kind of client list you could build with about a year of solid business builiding work. And there is absolutely no guarantee that the clients from this other guy will go with you anyway. If I were to sell my business to someone else I can guarantee that most of them would probably go somewhere else anyway. The relationship I have with them is a personal one that doesn't just transfer over to the next guy waving my banner. They know that I know what they like and there is a trust that has been established. Trust isn't something that is transfered. You have to earn it.

I don't know that a detailer who is willing to sell the names and numbers of his entire customer base is someone that has earned a lot of trust from his clients anyway. I'm sure lots of car theives would love to buy a list of cars and addresses for $50,000. I'll bet if you stole half of them you could tripple your investment. That is way too shady to even consider.
Click to expand...

I agree totally; all of my repeat clients keep comming back time and again specifically because they like ME working on their vehicles -- they know the work I do, and what I'm all about. If I sold them off to someone else, the new guy would almost certainly lose them, and if I were ever to come back to the business after such a sale, they probably wouldn't trust me anymore either.
 
You must log in or register to reply here.
Back
Top