Beginning and Ending

[olbuddy]

Hey Folks,
I was a regular reading of many of your posts, but had never entered into any discussions. However I learned enough from your conversations to be in business for almost 3 years. Now I'm getting out of the business. My question is, who would be willing to take my last 7 stores that will generate about $13K over the course of a year? Would it be best to ask for a % over a year or $2,500 and walk away. Any input would be appreciated. I'm out of Knoxville, TN.
PS: Thanks for everything.

Olbuddy

 

[Jonathan Ellis]

Do you have a contract with them? If not, there is really no value to the potential purchaser

 

[pressurepros]

It may be more appealing to a buyer to be a percentage of the sale but that presents a bigger risk to you. The reason for that is dropoff risk. The next guy may not clean as well as you. The customer may not like him as much. He could be not as relaible as you are.

From a potental buyer's standpoint the amount of gross dollars the business generates on those accounts is meaningless. I could go sell concrete at $.02 per s.f and have $100,000 in contracts in three months. Factoring in labor, travel, fuel, and other indirect expenses, one may be lucky to make a profit of $10,000. If I were a sole proprietor doing those accounts, that $100,000 in business would not be worth anything to an investor.

Unfortunately, service businesses are worth their tangibles (equipment, vehicles etc) and little else unless the business is completely hands off (run by employees), is making a healthy profit margin and has iron clad contracts in place.