How to sell a business?
December 12, 2018 11:38 AM   Subscribe

So I create artistic teapots. 6 months ago I retired the business due to personal reasons. I just had a conversation with someone who might be interested in taking it over. What exactly am I selling and how do I figure it out?

I have made my living creating and selling handcrafted "teapots". Someone may be interested in taking the business over and I am trying to just understand the basics. (I do know to engage a professional, but I'm not at that step yet)

Its something I create myself, so they are all my designs. I have a small, loyal following, and have had the business for 20 years. There is no stock or physical assets. I am *guessing* that I am selling the name, the followers, the reputation, the designs, customer list, the web content (articles, etc.), url, processes, supplier info.

To keep consistency in the work, I believe I would also need to provide training, and would be open to consultation. I am happy to have my designs continued, and my customers will be grateful.

Its a very small business. I had it down to part time the last few years and didn't do a lot of marketing, etc., I just let my regulars, FB page, and IG provide my sales, so I'm a bit at a loss, as I know when I was really doing the work the income would be 2-4x higher. (for example, lets say the part time low end was low end 20,000/year, full time, high end, 50-60,000/year.)

Is there a guide that can help me get a start on this, and how to do this successfully? Or just general information that I might not be thinking of? I'm just trying to ballpark this for right now.
posted by Vaike to Work & Money (4 answers total) 2 users marked this as a favorite
 
Check to see if there is a small business non-profit or branch of government where you live that might be able to provide free or cheap business advice. This is important because there might be local, state/provincial and federal laws that you might need to consider or follow. It's best to get it straight from the horse's mouth. I sit on a lot of Etsy seller FB groups and non-locals can't always give the best advice, even if well intentioned :)
posted by Calzephyr at 11:43 AM on December 12, 2018 [2 favorites]


You are selling your brand.
The buyer would continue to operate with your business name, your social media accounts, your clients, And your followers.

You are selling intellectual property.
The buyer would learn from you how you have been operating your business.

You may be selling your time.
The buyer may like you to stay on for some time and do some of the work (or advise) while the buyer ramps up.

That's probably what selling the business looks like.


Additionally, you might create a separate agreement that has you as a paid consultant. Or a board member. Or any number of arrangements. You should have a written agreement about how you may be engaged in the future.

You will probably want to consult an attorney.
posted by jander03 at 12:25 PM on December 12, 2018 [9 favorites]


You might want to consider getting help from SCORE, the Service Corps of Retired Executives. My uncle volunteers with them, and this is just the sort of thing they do. They have chapters and members all around the US. They'll set you up with a mentor who can help you sort through and manage the process.
posted by Winnie the Proust at 12:42 PM on December 12, 2018 [4 favorites]


A very rough ballpark figure for selling any business is around 3 to 4 years of net profits, so starting up again and running full time for a year to get a healthier set of books could produce a much higher sale value than just selling right now, but thats assuming you have a buyer who is willing and able to pay such a price.
The big problem I can see with this is that you, the only employee want to leave and that adds a big dollop of extra risk for any investor and may well cut in half the valuation.
Another way to look at this is if this new owner had to employ and pay someone to do your old job, how much profit would that leave the company making?
posted by Lanark at 4:13 PM on December 12, 2018 [1 favorite]


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