Question What is the value of good-will?

[Chuck Taylor]

A local small business is contemplating retirement and has offered us their current "signage" client base with all their press-ready artwork files with specific job and material specs and a warm introduction for (sign work only) totaling $35,000 retail, annually. They have been in business for almost 35 years, have a great reputation and work mostly with repeat clients and referrals. What kind of offer would a person make on something like this? They are selling the equipment privately.

 

[Gino]

Ask them what they would like to walk away with. They probably have asked several shops and will sell to the highest bidder.
Are you a larger shop than they were ?? Money-wise, not in size or employees.

 

[Chuck Taylor]

Ask them what they would like to walk away with. They probably have asked several shops and will sell to the highest bidder.
Are you a larger shop than they were ?? Money-wise, not in size or employees.

We are about the same size as they are and in the same geographic area, so an additional $35,000 in retail sales would be a boost for us.

 

[StarSign]

Are there any other sign shops in the area? Is there a chance you would get some of that business anyway, for free?

 

[Stacey K]

Are there any other sign shops in the area? Is there a chance you would get some of that business anyway, for free?

This is exactly what I was going to say. When the sign shop in the next town from me closed, I LITTERALLY had 5-6 people a day in my shop asking for work. My business increase greatly just by being "the other sign shop". I was completely overwhelmed for many months. I had to recreate a lot of the artwork but some of it the customers had from the shop so, it worked out. One customer called the gal and threatened to sue her if she didn't hand over his files. Thank goodness because that was 10k just in one year, it was a LOT of artwork to recreate if I had to!

 

[Chuck Taylor]

Are there any other sign shops in the area? Is there a chance you would get some of that business anyway, for free?

Possibly, but it's always nice to receive a warm referral, especially if we had all their artwork files, as much of their work is repeat business.

 

[Chuck Taylor]

This is exactly what I was going to say. When the sign shop in the next town from me closed, I LITTERALLY had 5-6 people a day in my shop asking for work. My business increase greatly just by being "the other sign shop". I was completely overwhelmed for many months. I had to recreate a lot of the artwork but some of it the customers had from the shop so, it worked out. One customer called the gal and threatened to sue her if she didn't hand over his files. Thank goodness because that was 10k just in one year, it was a LOT of artwork to recreate if I had to!

Boy... lucky you, hey! Unfortunately, we are located within a larger city, so there are already many other sign shops around.

 

[Stacey K]

Are you going to be able to offer the same type of products, the same variety that he/she does? When that shop by me closed, she only offered sign products so those customers were going to her for signs and other shops for apparel. I provide both service so I got the signs and I would say 60% of the apparel, some of course liked their apparel person, which I understood.

A lawn cutting business in my area did $40k in sales and the client list for sale for $5k. IDK if that helps.

 

[Chuck Taylor]

Are you going to be able to offer the same type of products, the same variety that he/she does? When that shop by me closed, she only offered sign products so those customers were going to her for signs and other shops for apparel. I provide both service so I got the signs and I would say 60% of the apparel, some of course liked their apparel person, which I understood.

A lawn cutting business in my area did $40k in sales and the client list for sale for $5k. IDK if that helps.

Yes, we basically do the same kind of work. I'm thinking active clientele / good-will would account for around 1/8th of the signage retail sales volume as in the example you've shown for the lawn care company.

 

[visual800]

just buy their phone number, just because you have a client base doesnt guarantee they will stay with you BUT buying thier phone number will secure any calls coming to them

 

[Johnny Best]

So, you think an extra $35,000 a year from buying their list and artwork, offer them $6,500 if you can afford it.
You sound like you want to do it.

 

[Chuck Taylor]

So, you think an extra $35,000 a year from buying their list and artwork, offer them $6,500 if you can afford it.
You sound like you want to do it.

Thanks for your input, Johnny - much appreciated!

 

[isignmaker]

A local small business is contemplating retirement and has offered us their current "signage" client base with all their press-ready artwork files with specific job and material specs and a warm introduction for (sign work only) totaling $35,000 retail, annually. They have been in business for almost 35 years, have a great reputation and work mostly with repeat clients and referrals. What kind of offer would a person make on something like this? They are selling the equipment privately.

Is your pricing/margin similar? How much would you net from this $35,000? More importantly what are they currently netting from that 35K? I would look at what you estimate the net profit from this 35K will be for you vs what it is for them and offer multiple of what it is for them. You can improve it and you should get paid for that not them. With that said this is not a large number so I would offer 1x net to them. So if they are making for example 5k off the 35k I'd offer 5k.
Keep in mind that adding 35k to your topline should drop down to the bottom line at gross margins since most of your overhead is already covered by your existing business minus the material costs. I love geeking out on this stuff. I have bought and sold several sign shops over the years and would love to discuss if you are interested...