I bought a business a few years ago, and now it's making me completely miserable.

March 12, 2013 3:17 PM

I own an Apple reseller somewhere in the United States. I bought this company from the former owner a few years back, despite having no education in business whatsoever (other than what I've learned on the job.) When I first took over as owner, it was kind of fun, challenging, a lot of work, and just slightly profitable (though with a debt from the loan I took out to buy the business). It was like this for about a year. Since then, not so much. Most days, I feel trapped and hopeless. So now I seek ideas.

Here's where I am today: almost a year behind in sales and use tax to two states; owing about half a million dollars (though the vast majority of it is what's called "good debt," and NOT like the back taxes I just mentioned); I've shot the business credit to hell, so NOBODY will loan us ANYTHING; I sleep poorly every day; the chronic depression that I had finally gotten some control of during the mid-2000s has come roaring back; I feel more and more apathetic and resigned to my fate as a failure; etc. I drink every day, when it used to be responsible, social drinking. This adds to my weight, which adds to the depression, and along with the reduced motivation to go to the gym, has lead to a gigantic circle of suck that just continues to feed on itself. My personal debt is also gradually climbing up (and it was already about $80K when I bought the business.)

(I'm posting anonymously, because there's only so many companies in my line of business, and I can't risk someone identifying my business. This post may be a bit risky, so I'm being vague on a number of details, though not so much that any advice would be irrelevant.)

We don't have enough money to carry proper stock of Macs or iPads, and regularly have to tell customers who want to buy, say, a MacBook Pro that although we don't have it, we'd be glad to take payment for it, order it, and have it for them in a day or two. Some will do this, but many decline and go to the Apple Store or elsewhere. It's only slightly less of a horror show for iPads, but with something like a gazillion different iPad SKUs, we can only really afford a tiny smattering of the most popular models. I struggle to meet payroll every other week -- and about once every six to eight weeks, it actually bounces (as it did this week). Overdraft charges are a near daily occurrence. We lost Net 30 accounts with the two major Apple distributors over a year ago, so virtually everything is on debit card or the occasional credit card that might have a bit of available credit on it. (I was finally able to beg one of the vendors to give us a much smaller line a few months back, but it doesn't carry us very far.)

We're thoroughly unprepared for any kind of big buy-in if we need to stock up for some kind of inventory surge (e.g., the holiday season), and by not being able to have decent stock, we lose out on sales, and develop a word-of-mouth reputation as a fifth-rate, "wanna-be Apple Store." A customer trying to buy a personal machine, and not being able to, could be a decision-maker in a company's IT department, so a lost sale could be the starting point for a string of lost sales we'll never even know about. We're losing out on the simple, organic things that should happen to slowly help a business grow, because we're constantly cut off at the knees.

This state of affairs is chipping away at my mental (and increasingly, physical) health. There are far too many times when I just shut down — I become very quiet, staring off into space, and just obsess over how everything just went to hell. I don't even go into the stores as often as I used to, because I don't need people to see me like this. But by not being as involved in the business as I used to be, little problems grow big, and that snowball gets bigger and bigger and rolls faster downhill.

A few months ago, I went to a conference for fellow Apple resellers, but ended up depressed, jealous, and angry most of the time. Though I know it's self-destructive and bad for me, I ended up hating other resellers and being violently jealous and resentful of their success. They seem to be so much better off than us, have better looking stores, can freely talk about making big sales, etc. Meanwhile, I can't even afford to stock more than one each of 2-3 models of Mac (when there are 10-15 individual Mac SKUs at any given time). This anger and resentment eventually turns inward and becomes depression, feeds into my feelings of incompetence, lack of self-worth, and failure. And on it goes.

I am working to slowly catch up on the back sales taxes, paying off a month at a time, but at a frequency that is slightly faster than once per month — so that we should be current with it, hopefully, in a year's time (if they don't bury me with more liens or penalties). I try to order what I can, and get what little stock of CPUs I can, on occasion. But a large amount of money is what's needed to really turn this thing around, and I'm done asking for it. Much of the aforementioned half a million is in family loans (part of how it got that big is that they insisted on paying off two bank loans and "refinancing" with them instead), and I've given up on asking. I don't even consider the idea, because I don't honestly have faith that they'll ever get their money back. There are (maybe) three possible ways out of this rut: (a) Maybe I can sell this thing; (b) maybe I can find investors (though I don't know how one does that); or (c) maybe I'll cash out most or all of the money I've set aside for retirement/children's college/long-term and just let it ride, gambling that the investment will pay off.

So I don't know what to do. Perhaps I could find a few people to become investors, but I (a) have no idea how one goes about getting investors (even though one of my employee's friends and one of my wife's friends have both approached me -- of their own accord -- to invest in the business), and (b) am leery about owing more people more money. Much of it would be used to properly stock up both stores, but inventory is almost completely "sunk" money — sure, a little bit of it comes back as profit with each sale (and I DO mean a little — Apple's margins for resellers are crap) — but much of it just gets cycled back into replenishing the same inventory. So how do I pay these investors back?

A little more on each option:

OPTION A: Selling the business. I have been approached by two different companies, each in the IT services/support field and each grossing about $60M annually. (We did $1.5M last year.) Neither does retail, nor do they have much interest in the storefronts (even though they both claim they'd keep the stores open for "branding" anyway) — their money comes from business-to-business and on the service contracts, etc. With Apple's rise in popularity over the last decade, they're realizing that many of their customers want to buy Apple products and/or have them serviced, and they can't do it.

That's because, about a year or so ago, Apple stopped taking new applications for resellers OR service providers. (We are authorized for both of those things, and are thus grandfathered in.) I'd say that this is why these large companies are coming to me, taking me to lunch and dinner at as much as $150 per person, and "just brainstorming" about possible acquisition. There's been a few meals together, and in both cases, it's come to mention of the next step being an NDA and opening the books. But in both cases, I've not heard from them after that point. Maybe this is part of the dance; I don't know. Maybe they ran our credit and saw the three tax liens (so far), and ran far, far away.

But my hope is that when Apple shut down the option for companies to apply to be resellers or service providers, the value of our existing authorization shot up overnight — ideally meaning that we hold the proverbial "golden ticket." (You could still apply to either of these channels back when I bought the business, so it wasn't so rare. And this was pre-iPad, too.) From what little I know of business sales, it seems to me that this makes us less a "financial" acquisition for a company than it does a "strategic" acquisition (or at least I HOPE this is the case). We have something that is in limited supply, and it could be of value to a larger, established player who happens not to have any Apple authorization.

But if we do the NDA, and I open the books, we'll look like garbage. The $1.5M in revenue is awful compared to what we would be making if we simply had product in stock and didn't have to turn away so many potential sales. Then throw in the nearly half a million in debt, and the fact that I struggle to even pay myself, and by conventional business valuation practices, I can't sell this thing even for enough to cover our debt. We are the business equivalent of being in an underwater mortgage.

So I'm hoping NON-conventional business valuation wins out. Our performance (or lack thereof) really isn't a relevant indicator of how a buyer with resources would do with this business. This is for a couple of reasons: (a) a buyer with a large existing B2B customer base (whereas ours is 90% consumer) can make a TON more sales, and take in a TON more machines for service than we do, overnight, just based on their existing relationships, and (b) the aforementioned "golden ticket" that is Apple authorization. They aren't giving these out anymore, so they only way to get in is to buy your way in. (Apple approval of the transfer would obviously be a contingency of any sale of the business.)

But I know every business owner thinks their business is a special snowflake, when that's usually not the case, so I've already steeled myself to be slapped down with cold, hard reality.

OPTION B: Getting investors. An employee has a friend who has money saved up and is looking to do something with it. My wife has a friend who's in much the same situation as well. And maybe I can find one or two more. But how do you go about doing this? How is it managed? How does one "advertise" to find other investors beyond these two possible ones? Hire a lawyer? Are there people who do this sort of a thing for a living (and won't be expensive as hell)? I know next to nothing about this.

OPTION C: This one will hurt, but it's the one I have most control over. I can take about $100K to $120K I have in managed stocks/investments and cash them all out (meaning my wife and I will have then have little to no retirement or college funds). About $30K will be eaten up overnight, just to get us caught up in back sales tax; another $50K to $70K will go into finally getting proper stock in the stores, and if there's anything else, it can go into just generally improving the cash flow picture. Part of what makes me even consider this course of action is that my parents will eventually leave us a decent sized inheritance -- more than the figures I just mentioned, but definitely nowhere near seven figures, either -- so it isn't as if my investments are all we have for the rest of our lives.

In the meantime, my quality of life has been declining for the last couple of years; my wife and I have had to put off trying to have a child because we have no idea of how we can support one; I drink too much, hardly ever exercise, am depressed damn near all the time, and hate to even wake up in the morning (if you define 11:30 AM as morning). I have to get out of this somehow.

Throwaway account, if you wish to contact me offline: [e-mail]

posted by anonymous to work & money (20 answers total)

Sounds to me like you don't have a real strategy for moving forward: If you choose options B and C you're buying time, but you're back to competing with the Apple stores.

Opening the books for Option A doesn't close off B and C, but it does give you an idea of what the business is worth, and if you manage to find a role in the new organization, might also give you an option to do the portion of the business that you do enjoy. ie: Option A because some mix of A and B.

I'd pursue acquisition.
posted by straw at 3:24 PM on March 12 [5 favorites]

Oh, God, honey, I give you so much credit for trying, you hustled like hell, but just sell and walk away.
posted by Snarl Furillo at 3:30 PM on March 12 [11 favorites]

Option A. Options B and C are just kicking the can down the street.
posted by Tanizaki at 3:33 PM on March 12 [1 favorite]

Yes, definitely option A. There are worse things than to have a business not work out - it happens all the time. If you can get out the door with your dignity, sanity, and retirement funds intact, that's a huge win for you.
posted by deadmessenger at 3:46 PM on March 12 [6 favorites]

Option A. Do not dissolve your personal funds to "do the right thing" (which it isn't anyway). You have companies who want your reseller rights. These are valuable. Sell them.
posted by Lyn Never at 4:02 PM on March 12 [1 favorite]

Perhaps sell a non-controlling percentage of your company to one of the companies that was interested in buying you outright. This may bypass the need to get Apple approval, and the investing company would be able to use you as their apple specialist division.
posted by Sophont at 4:03 PM on March 12 [3 favorites]

Option D. You need to get some sort of partnership with these big firms looking for the license. One way would be for them to pay off your debt for the rights to use your license to service their customers while you continue to run the store fronts. Two divisions, retail and corporate with you running retail and them corporate. Maybe even they would buy the whole thing and make you an employee running retail for a salary and bonus of a percentage of the profits.

I agree that there is material value in your licenses. I also think there is a business in running the retail stores if you weren't so under water. You are simply too undercapitalized.
posted by JohnnyGunn at 4:03 PM on March 12 [4 favorites]

Your licenses likely do have material value, and a buyer won't necessarily be dissuaded by your tax liens etc.

What seems an intractable problem to you can easily be fixed by a wire transfer from a company with more capital than you.

Your best bet is to contact a business broker in your area. This is a person whose specialty is selling closely held businesses to third parties. He or she can help you value your business and market it to potential acquirers.

But more generally: you sound depressed. Consider getting therapy to help you process all the negative emotions you have regarding your business failure. Once you dispose of the business you will still have those emotions.
posted by dfriedman at 4:13 PM on March 12 [6 favorites]

Those licenses are where the money is. Make sure you understand how to transfer their use legally - Apple may be looking for reasons to eliminate the grandfathered licenses.
posted by quince at 4:14 PM on March 12 [2 favorites]

Could you get rid of the retail stores and just convert it to an online business with blind drop shipping from Ingram or Tech Data or whoever the wholesale distributors are that you mentioned? I'm not sure if you can get out of your leases, and even if you can, what your niche would be online that would allow you to compete against other online resellers of Apple products, but presumably there might be a niche you could develop. Retail is a bear and it's understandable that you feel down and defeated, but you are not alone - all you have to do is look around at how many restaurants open and close all the time and you can see that all retail businesses are risky and it's not that you did something wrong. Online sales are killing all kinds of retail businesses (I just talked to a toy store owner recently about this topic) and so maybe the correct strategy is "if you can't fight them, join them". You do have assets (the grandfathered status with Apple and your company's good will) that presumably you can leverage on your own and then gradually build up the value of the business. But if you think that's not do-able, then just cut your losses and get out.
posted by Dansaman at 4:16 PM on March 12

It's hard to say if you have any options - how much is your payroll, and can you cut it? How much in profit do you make every year, and what are your expenses like? How much are you paying yourself? How many customers walk through the door and what percentage of them actually buy things? What's your customer base? What advantage do you have over competitors?

straw was right - you don't really have a plan going forward. Is there a way to make more on service?

I run a business that's part retail, part service (bike shop), so that's where I'm coming from. FWIW, we don't pay ourselves, and we work full time. That's how we save about $60k/year in expenses that aren't being floated on a loan while we build up stock and market share.

Do you have a chapter of SCORE nearby? They're SO HELPFUL. Seriously.

Don't do option A. For real.
posted by kpht at 5:16 PM on March 12

I work in the finance department of one of the most successful VARs in the world. (I cannot give you more specific information than that since I'd rather not self-identify.)

In my opinion, the trouble with Apple is that when you sign a reseller agreement with them, the fine print usually involves you having to meet certain financial and promotional commitments to Apple that amount to them sticking their hand up your rectum and playing sock puppet. Some people say Cisco makes you jump through hoops, but Apple makes Cisco look like your best friend.

Consequently, I feel that a lot of the value of your reseller agreement would depend on the specifics of what your obligations to Apple are. Do you have to meet certain minimum sales criteria for Apple products? Do you have to recommend Apple to your clients, and do a certain amount of advertising of Apple products in your store? Or could you sell as many or as few as you wanted, without being in breach of your agreement?

If it is the former situation, then my opinion is that your reseller agreement isn't very valuable at all, since it forces any company that acquires you into a business path that they may not want. If it is the latter, then it might have value to an MSP or VAR seeking to provide a broader base of services to their clientele, especially since you are authorized service providers.

Another question is this - are you a reseller, or are you a value-added reseller? Do you provide any B2B solutions? Or is this all basically retail? Businesses generally don't mind delivery using a JIT model (which involves waiting a few days for delivery), so I suspect that you are mostly B2C or a retail outlet, right?

Based solely on the information here, I think that option A is the best solution, because unless you have some radical new idea that will change your business model, it sounds like Options B and C are just throwing good money after bad.
posted by wolfdreams01 at 8:54 PM on March 12

To me, this is a "what should I do with my buggy-whips business?" question. Even if you have cash flow, Apple is going to feed their retail stores with product ahead of you. You need a sea change. If your geographic market has a fair number of creative economy businesses in it, go after the only market with any profit: services. Otherwise? Plan A.
posted by machaus at 9:52 PM on March 12 [4 favorites]

You don't have the capital or the skills to get this business to where it needs to be, which has you depressed, which creates yet another a barrier to getting the business to where it needs to be.

C is a terrible option. In theory, it might give you a chance to turn things around, but even if it is enough capital, you still likely have a skills gap and the depression to deal with. Indeed, it could even make the depression worse, knowing that you've gone all-in.

B, or something variation thereof could work, but you still have the skill-gap, and you'd be trading the anxiety of liquidating your retirement savings for the anxiety of having to pay back other people's retirement savings. The only way this thing is going to work is if you have a good plan for growing revenues and profits.

A may be your best option, but your negotiating position is crummy unless you can line up multiple serious suitors or otherwise create a sense of real urgency. Otherwise, they'll know one you open the books, if they don't know already, that the longer they wait, the more desperate you are going to be to sell. What you really need is to get things back on track so you have some time to negotiate a good offer. That might take some sort of bridge financing.

Some thoughts on how to go forward: See if you can find someone who is willing to put a little bit of money and effort into the business in exchange for a nice upside when the thing sells. The deal might be something like, they get their money out first in any sale, and then they get a healthy % of any proceeds over and above the current traditional valuation of the company. Basically, they get made whole, then you/your bank get made whole, and they make a good % on anything above that.

Another thing that can help buy you time to develop and start executing a plan, getting a rotating line of credit from a bank that you can use to fund your inventory.

As for where to look for help finding such a person, as well as potential buyers, etc, have you talked to your lawyer and your accountant? How about owners of Apple stores in other territories?

If you consider carrying on with this, you really, really need to address your depression, and your drinking AND you need a no-bullshit business plan. You need a very clear understanding of what it means for this to be a sustainable, appropriately profitable business and you need a very clear and realistic picture of what it is going to take to get from where you are now to there. How much volume? What kind of margins? How much up-sell on services and accessories to reach those numbers? What kind of marketing and advertising spend, how much inventory? How much should you be spending on store maintenance, employee training? What kind of store improvements should you be making? How are you going to differentiate yourself from the Apple store (what works for your peers). Who do you need to hire, or contract with to fill the gaps in your ability to hit the targets?

And, if it comes down to it, bankruptcy. Your creditors would like you to feel shame and a sense of honor, but the truth is, when push comes to shove, they will default on their obligations (and get the federal government/tax payers to bail them out) . Don't wait until you are completely broke, broken and divorced.
posted by Good Brain at 1:36 AM on March 13 [2 favorites]

Sorry, I missed the part about a substantial portion of the debts being to family, that makes walking away from the business harder, but really, it shouldn't have to come to that.

Also, I forgot to comment on the question of paying back investors: You don't. Investors buy a share of the business in exchange for a portion of any profits and/or the expectation of returns on a sale of the business, or their portion thereof. As part of the agreement around the investment, you would probably specify right of first refusal if they want to sell their share to another party. You might also specify the right to pay them for their share over a period of months, or years. This is not a liquid investment, like stock in a publicly traded company. One consequence, you really shouldn't be taking investment from anyone who can't afford to loose everything they invest.

The prospect of coming up with a business plan, as mentioned above, may seem daunting, because it may force you to confront the fact that you don't have answers for a bunch of things you need answers for. It may also tell you something that you don't want to hear, like this business is never going to be sustainable, or that you are going to need another $500K in capital over the next two years to have a chance of making it sustainable. The thing is, those things are going to be true whether you confront them or not, but if you start confronting them, you can start doing something about them. All the stuff you might not understand that you need to understand? Working on the business plan helps you map all that out and once you've mapped it out, you can start figuring out how to fill the gaps.

If it is going to take $500K in capital to get to viability, well, now you know. A bank is going to be more likely to give you a loan if you can show you've thought things through. The family who has invested in you might not love the thought of putting more money in, but if you can show them that the end is in sight, they might feel better about it. You will also feel better about it, because you'll have more confidence that you won't be surprising/disappointing them again in 6 months needing more.

Good luck. I think that there is a positive outcome in this somewhere for you. At the very least, you can find your way to a much better place than you are now.
posted by Good Brain at 2:07 AM on March 13 [1 favorite]

Stop using personal money to shore up the business.

Sell it, pay off your loans to your family and get a job to pay the rest.

If it's practical to go bankrupt, for any credit or other loans, do that.

The LAST thing you should do is put any more money, or effort or love into something that isn't paying you back.

It sucks to have a dying business, but it happens. What many people do is hock the house, their 401(k) and hit up every family member for a loan, and THEN end up closing.

You see that this isn't a viable concern...for you. If there are willing buyers, sell.

You may be selling the Apple relationship alone, and what's left of your stock. After that, walk away and don't look back.
posted by Ruthless Bunny at 8:42 AM on March 13 [1 favorite]

[This is a followup from the asker.]

Thanks for all the input. What kills me is that yes, this is really just a case of us being undercapitalized -- more resources (a "bigger canvas to paint on," if you will) would give me the breathing room to turn things around.

Anyway . . . here's some more details, answers to questions, etc.

I have to confess that I was really starting to lean toward C -- putting in my own money -- because the back taxes could kill this business faster than anything else, and getting that in check would buy me time. I'm confident I'll have no problem keeping current with it once all the back tax is paid off. In addition, my theory had been that putting the other block toward properly stocking the stores, and keeping that money for stock only (i.e., the money from each sale of an item flagged as "basic stock" would go right back into the same account from which stock is purchased, and would not mingle with the operating account). My theory here was that the slow rebuild in sales income would gradually rebuild customer confidence, slowly lead to more sales, and ergo, slowly growing profit. But by all means, please feel free to tell me the flaws in this theory.

Regarding selling the business: It's very clear that this is the odds-on favorite course of action. Of course, it's only 50% in my hands; I need a buyer. And I should clarify that I really don't know if it's that viable an option -- maybe I gave the impression that I have these two buyers knocking down my door, and that's not quite the case. Actually, the two potential suitors have a habit of drifting off. In both cases the pattern has been much the same: We chatted a couple of times, had a lunch or dinner or two, where we each asked a lot of questions and talked about potential scenarios from partnering all the way through outright acquisition. In both cases, we ended up leaning toward acquisition, with me staying on at least for a year, as an employee, to run the retail part and/or transition out. We agreed that the next step is that they'd put together an NDA and send it to me, and . . . that's when they both disappeared. I eventually get in touch with one, they say "oh yeah, sorry -- I've been traveling a lot lately and just got back; I'll get it out to you by the end of the week." (This was early January.) And then nothing. The other one, I haven't gotten back in touch with yet; we last met for lunch in early February.

So, in other words, I really have no indication that either party is really that serious. Again, maybe this is some strange kind of subtle negotiating tactic, but I'm more inclined to think they've lost interest, maybe due to doing some due diligence and finding whatever they can in public records, D&B credit report, etc.

I've put in inquiries with a couple of business brokers in the meantime; I realize there's no reason in the world for me to feel like these two are the only options available to me. And even if I do end up moving forward in talks with one of them, I'd need a broker (and ultimately attorney) sooner or later anyway.

The biggest question mark in all this is the value of the Apple reseller and service provider rights. I WANT to think they're of great value, since Apple isn't giving out new authorizations -- and it seems like common sense that they would be of value -- but I don't actually KNOW that.

Regarding the depression: Yep. It's been a factor in my life pretty much as long as I can remember, and I know it's not going to magically disappear if I sell the business (or get it to a better place). But at least I can get away from the main thing that's causing the depression to get worse. I'm thinking of therapy, provided my wife's insurance covers it. (It's from a conventional, corporate job and I'm told it's pretty good insurance, so hopefully it'll be covered.)

Transfers of the Apple authorizations DO happen. I know of another independent reseller like us in a nearby market that recently sold and obviously retained its authorizations. They do scrutinize the new buyer, though. I even ran a hypothetical by our Apple rep at the conference last year (EXTREMELY vague, of course), and he said in essence, "I wouldn't worry about it too much -- companies that size, doing that kind of business, are pretty much the perfect kind of buyer, as far as Apple's concerned."

Could you get rid of the retail stores and just convert it to an online business with blind drop shipping from Ingram or Tech Data or whoever the wholesale distributors are that you mentioned?

Nope. Our contract forbids online sales EXCEPT to existing customers, who would get a login/password to any e-commerce site we set up. We can't just set it up for sales to anyone who comes along; they have to have set foot in our store and made an in-person transaction first, at some point. This is a big enough deterrent to not make it worthwhile. (Oh, and you hit it right on the head guessing the two major distributors of Apple products!) And in the end, having to compete against the likes of Amazon, Mac Mall, and -- dammit, them again -- Apple themselves -- won't be a picnic, either. Plus, if we're online only, we don't really have the ability to do repairs or onsite support anymore, both of which are far more profitable than retail sales (unless you're doing big, B2B-scale sales -- and even those are often bundled in with support contracts).

Another question is this - are you a reseller, or are you a value-added reseller?

We're what's called an Apple Specialist, which is the higher tier of authorized resellers. In this tier, we have to be focused on Apple products and solutions -- our storefront should be dominated by Apple; indeed, we're essentially Apple stores, but independently owned. Their ideal is that we look 90% like Apple corporate stores (that last 10% would probably infringe on their trademark). We can't just have Apple be another brand in a list of mainly Windows-based machines that we "happen" to sell; otherwise, we'd "only" be an authorized reseller and not a Specialist. Specialists also get back-end dollars every month, based on the previous month's sales and a variety of complicated performance metrics, which regular resellers don't. A potential acquirer would probably be knocked down to reseller status if they close the retail storefronts, but the two I've spoken with so far both say they'd like to keep retail open.

We're pretty much all retail/consumer, with the occasional B2B sale. The two potential acquirers I spoke with are pure B2B.

And, if it comes down to it, bankruptcy. Your creditors would like you to feel shame and a sense of honor, but the truth is, when push comes to shove, they will default on their obligations (and get the federal government/tax payers to bail them out) .

Oh, I absolutely agree. Problem is (as you note later), a lot of that is family debt, and is in their name only. They "refinanced" both a business loan and a business line of credit I initially had, because they wanted to give me the ability to pay at my own pace, at zero interest. Great, but now those two debts won't be protected by bankruptcy. (It's not just me -- apparently most of my family doesn't know how to think like a businessperson, either.)

Alrighty . . . I'll get on the stick with talking to business brokers. Strangely ominous thing about that conference last year: They had a presenter who talked about setting your business up to be sold, and we all got free copies of his book. Time for some review, methinks.

posted by cortex at 1:18 PM on March 13

The biggest question mark in all this is the value of the Apple reseller and service provider rights. I WANT to think they're of great value, since Apple isn't giving out new authorizations -- and it seems like common sense that they would be of value -- but I don't actually KNOW that.

It's not. I had the chance to get a reseller agreement with Apple several years ago (at any level I wanted), read the reseller contract with skepticism and awe, and my recommendation to management was that we would have to be absolutely crazy to get involved with them. We have never regretted that decision.

Look, Apple is a very successful company, and the reason they are so successful is because they are very good at exploiting their supply and distribution chain. Partnering with them is like "partnering" with a venomous snake - it's only a matter of time before it bites you. Maybe you can turn the business around - and in the short term, it might even be a good decision because it will make your financials look better and net you a better price. But in the long run, your goal should be to sell this company.

My impression is that the reason Apple phased out the Reseller agreements is because they don't want any resellers - they're trying to make a push to having all Apple products on the consumer end be sold in Apple stores. Hence they will gradually make it more and more difficult to be a reseller.
posted by wolfdreams01 at 3:56 PM on March 13 [2 favorites]

Back in the late '80s, I was out of high school and trying to find jobs during college and hung around any number of small computer stores, selling stuff on commission. They were always just a little bit of capital away from being super super profitable. And they were always behind in their sales tax. And always "that one big corporate sale" away from catching up on everything and having capital to move forward, and that one big corporate sale ended up being low enough margin that it was lather-rinse-repeat.

So if you do move forward, the question is: What major change in business strategy is different this time than when you dived into this a few years ago? Because I've seen way too many computer retail shops keep blowing through capital thinking that the next fifty or hundred thousand dollars is going to change everything.

And I'm with wolfdreams01: Not only is Apple phasing out Reseller agreements because they want to control the channel, they have the economies of scale and control over the brand that let them better manage all the people who want free support.

The people who are going to come to you are the people who have worn out their welcome at the Genius Bar. Those are not profitable customers. They will chew up your sales staff time with questions, and probably have a 5+ year replacement cycle on their technology.

Partnering with or selling to someone for corporate sales seems like a dramatic change in strategy that might make things different going forward.
posted by straw at 9:05 AM on March 14 [4 favorites]

In the spirit of looking for something that would break the cycle and change the model: Can you sell used Apple or non Apple products? Can you repair out of warranty products without using Apple's repair depot?

The pace of change in desktop desktop/laptop computers has slowed enough that 3+ year old computers can still be quite useful. Adding a used computer business would mean that you could offer trade-ins, which would help attract new buyers. You'd have something to offer price sensitive buyers who come in the door, but end up unwilling to pay for a new system. You'd also have the opportunity to upsell people who come looking for a used system. Moreover, the margins on the used machines can be higher.
posted by Good Brain at 11:40 AM on March 14 [2 favorites]