Has anyone ever done a deal like this?

cormie

I've posted in this forum numerous times about the challenges I'm facing with my business, mainly that I've been stuck in the same spot for a while in that I'm just managing everything by myself and as a result, am extremely busy to the point where I can't even bring myself to take on the mental task of sorting the issue out (i.e. hiring the right person(s) to take it further).

The business in question is www.VanTasks.ie. I've managed to establish a very good reputation and believe I have built a pretty strong brand. As much as I'm able to make a comfortable living off of it, I have a strong urge that I want to do something different. I've other passions and interests and business ideas in these lines that I'd love to explore and as much as VanTasks is my baby, I feel it's getting in the way of me doing what I'd truly like to do, which I've ignored for long enough and I'm not getting any younger.

I'd be happy to sell the business or do something that would allow me escape from the day to day running and responsibilities of it but the problem with trying to sell it is that I've always felt it would be undervalued as the sales simply don't reflect its potential. I refuse a lot of jobs and although I reply to every enquiry I receive and phone every customer who I miss a call from back, I try and always put myself first and don't allow myself to get weighed under too much, believe me, I'm already weighed under enough.

To give an example, if I get a run to Europe, I'll try take a day or two to chill (never happens, I'm always still on email and phone on any day I've tried chill for) and I'll put on the website that I don't have availability between certain dates so a lot of jobs are being missed out on here, as well as just in general where I don't follow up on quotes I may have sent but never got a reply to.

I was recently contacted by the director of a larger, longer established relocation firm who was interested in a working together in terms of passing on international jobs to eachother for mutual benefit and it got me thinking, what if I was able to pass the whole management and running of the business onto an already established firm who know the score and have all the right systems in place to run it properly and then I was thinking again, how could I ensure I'm getting a good deal and the worth of the potential it has and was thinking, what if we were to strike a deal where I actually become a shareholder in their company where I'd get a certain % based on the the comparison of earnings of VanTasks VS their company.

This would mean I'm not just giving it away, but I'm handing over the management of all the business and enquiries which I've earned through building the business, and all the enquiries which I can't fulfil, to a team who will be able to better manage it and secure more sales due to their workforce and connections and by doing this, the profit for the take over company would increase and then I just get my cut from that.

I've never really heard of anything like this and it just came across that it could be a good idea.

Would really appreciate any feedback on this!

pedronomix

Firstly, you need to understand that this type of mostly one-off service business has little intrinsic value and low barriers to entry. Why do you think anyone would be prepared to pay for "potential" when it is they who will need to invest and do all the work to exploit it where you have failed?

The idea proposed is rather naive and would hold little attraction to any other business. You might be able to get a deal where you sell them the business at a better price based on a larger earn out than upfront cash deal. What businessperson would want a non working shareholder on board unless they were a major investor. If you are not into it, sell it and do what you really want to do. You are dreaming if you think you can have your cake and eat it.

pedroeibar1

A couple of comments –

IMO there are several separate issues here. Firstly, you are in the classic situation of being up to your a$$ in alligators and unable to complete the task of draining the swamp. Also, you have failed to learn how to delegate and I’d suggest have an over-valued view of your business (nothing wrong with that, everyone does it!) You also have had this problem for a few years, so will you ever be able to overcome these issues? I strongly suspect that you are too important to be driving a van to Europe, you should be “front of house” meeting customers/new business. Are you using these trips as an escape (excuse?) to avoid the hard decision of bringing the company to the next stage? Why not recruit an occasional driver for the long trips? Lots of for e.g. youngish retired Gardai out there who would be interested/suitable. Forget trying to “chill” when overseas, any international businessperson will have been to countless exotic places and never been beyond an airport hotel.

For the future direction of your business, a huge amount depends on the people in the relocation company (integrity, professionalism, honesty, etc) and how you (and your ethic/attitude/outlook) would relate to them - if those factors do not “gel” a mutual operation would not work. Another factor is the size (turnover) of the respective entities. The relocation company might have other activities that are unrelated to removals e.g. assisting international staff relocation, school or house-search, etc. so the two operations might not be comparable or compatible financially.

The simplest way of working this is to pay a referral fee on business introduced, a sort of commission. That would work only if you had a common (agreed) pricing structure. What happens to image / brand? Your customers come to you and might not like being serviced by the relo company.

A second way is to set up a joint venture operations company (it need only be a shell) through which the “common” business is placed.

Whatever way is chosen, I suspect that the answer does not lie in the direction you suggest (obtaining a share in the relocation company) but in the opposite way, whereby they would acquire a share in your company with an option to purchase more at a later date. That could be structured in such a way that there is an earn-out for you (everything must be clearly set out in a shareholders’ agreement). The downside of that for the relocation company is that it might bring more business to the operation than you do and in effect they would be increasing the eventual buy-out price to them.

PS I like your website,
PPS if you buy your canteen milk from John, say “Hi” to him.;)

Atomico

cormie wrote: »

I've posted in this forum numerous times about the challenges I'm facing with my business, mainly that I've been stuck in the same spot for a while in that I'm just managing everything by myself and as a result, am extremely busy to the point where I can't even bring myself to take on the mental task of sorting the issue out (i.e. hiring the right person(s) to take it further).

The business in question is www.VanTasks.ie. I've managed to establish a very good reputation and believe I have built a pretty strong brand. As much as I'm able to make a comfortable living off of it, I have a strong urge that I want to do something different. I've other passions and interests and business ideas in these lines that I'd love to explore and as much as VanTasks is my baby, I feel it's getting in the way of me doing what I'd truly like to do, which I've ignored for long enough and I'm not getting any younger.

I'd be happy to sell the business or do something that would allow me escape from the day to day running and responsibilities of it but the problem with trying to sell it is that I've always felt it would be undervalued as the sales simply don't reflect its potential. I refuse a lot of jobs and although I reply to every enquiry I receive and phone every customer who I miss a call from back, I try and always put myself first and don't allow myself to get weighed under too much, believe me, I'm already weighed under enough.

To give an example, if I get a run to Europe, I'll try take a day or two to chill (never happens, I'm always still on email and phone on any day I've tried chill for) and I'll put on the website that I don't have availability between certain dates so a lot of jobs are being missed out on here, as well as just in general where I don't follow up on quotes I may have sent but never got a reply to.

I was recently contacted by the director of a larger, longer established relocation firm who was interested in a working together in terms of passing on international jobs to eachother for mutual benefit and it got me thinking, what if I was able to pass the whole management and running of the business onto an already established firm who know the score and have all the right systems in place to run it properly and then I was thinking again, how could I ensure I'm getting a good deal and the worth of the potential it has and was thinking, what if we were to strike a deal where I actually become a shareholder in their company where I'd get a certain % based on the the comparison of earnings of VanTasks VS their company.

This would mean I'm not just giving it away, but I'm handing over the management of all the business and enquiries which I've earned through building the business, and all the enquiries which I can't fulfil, to a team who will be able to better manage it and secure more sales due to their workforce and connections and by doing this, the profit for the take over company would increase and then I just get my cut from that.

I've never really heard of anything like this and it just came across that it could be a good idea.

Would really appreciate any feedback on this!

Why not just sell off your assets, wind up the business and move on to more interesting projects? I think the part in bold might be wishful thinking. Why would someone would pay for the potential you see in the business - the work will still have to be done to realise that potential, and you won't be the one doing it..

This is why the number one rule is to work on your business, not in your business, i.e. don't base it all around you

pedronomix

Bit of an echo around 'ere!! However this business is worth more than the basic asset prices.

pedronomix

pedronomix wrote: »

Bit of an echo around 'ere!! However this business is worth more than the basic asset prices.

Yeah it is. I'd be having a drink with this other director, and asking him to make me an offer I can't refuse.

cormie

Thanks for the input and comments everyone!

Yep, although most customers will be once off and there's plenty of competition out there and Joe down the road with a spare van at the weekends and evenings can do it cheaper, brand and reputation can play a big role in securing jobs, especially higher value jobs where people want to trust who they are dealing with and people are willing to pay for that. I believe I've built it to that level.

When I say potential, I don't mean so much that if x, y and z is done, then it should be possible to get a lot more requests coming through, I'm turning down work as it is and a lot of the work could be easily quoted on in a different set up with a larger team of staff and network, for example with the larger operator I mentioned, rather than me passing on all the jobs, they could be dealing with the quotes direct with the staff and network they already have. Availability and resources is my weak point.

I've never looked for sales, they've all just come to me. I advertised with Google Adwords for about 6 months back in 2007/8 I think, but concentrated on a different approach to the web (which is where most enquiries are from, the rest being word of mouth and repeat business) and other than a facebook competition here and there and the signwriting on the vans and taking out an ad in a customers program for a show, I've never really advertised since.

To just sell off the assets and wind up the business would be a bad move. I've had more sales in the last 8 weeks than I'd get for selling on the assets, and I've probably missed out on close to that again due to availability and resource limitations.

Unless the full team of staff are working flat out in a larger company, then I think it would be a great addition to increase sales with the resources they would probably have most of already and that's without the greater potential of seeking regular contract work with weekly deliveries and the likes, which again I've never sought but feel it could be another opportunity to respectfully increase sales.

pedroeibar1, yup, I'm definitely using the EU trips as a chance to get some sun and explore, it's mostly only for 1/2 days while passing through somewhere once or twice a year so nothing much but you're right in that from a business perspective, my best place is in the office, which is my home, so no canteen And I don't drink dairy milk

Thanks for the other helpful points, I'd be quite happy to go with any kind of structure that would just leave me able to eventually step down and somebody else take over, whether that's a buy out, a joint venture or them getting shares in my business or me in theirs. It would just be a complete waste of a perfectly good business and brand to just wind it down and I'd hate to see that happen.

I was thinking to approach a few different larger removal firms to see if there'd be any interest but again, approaching with the current sales figures doesn't really convey the worth and how they could benefit with their already in place staff and resources.

The make me an offer I can't refuse one could be a good approach

pedronomix

Good post Cormie. You are clearly unable to do it all yourself. Your promotion/marketing/selling are obviously up to the mark and you are good at it. Stick to things you are good at, is a very solid adage.
I have a suggestion for you. Restructure your business to a new model along the lines of the branded courier operators but aimed at your market. Recruit ex FastWay etc drivers with their own vans to do the work. They are used to working extremely hard, long hours and you could pay them a much fairer rate. You would need to train them, QC their work and mostly focus on the commercial rather than the donkeywork aspects of the business. This way you leverage your reputation and brand and have a proper business that you manage and the workers do the labour.

kupus

You say you are losing a lot of business due to being overworked.
Why not set up as an agent so and just take a commission of every sale that you pass onto the next van delivery?
You keep your core business doing the work you want and pass the ball to somebody else that you trust.

cormie

Thanks again for the input above. This would be the idea with the larger operator and why they got in touch with me, they wanted somebody they could pass work to that they can't do and they suggested I pass work to them that I can't do, for example, I couldn't give a competitve price for transporting 5m3 of boxed belongings that there's no urgency on from Greece to Ireland as I just wouldn't have the demand and would typically have to charge based on a dedicated load service. I've a fair amount of such enquiries that end up going nowhere.

Restructuring the business would be a whole new undertaking itself and ideally, I'd like to just pass this business on to someone who'd be able to run it to give me the freedom to explore ideas that I'd be more passionate about and I'd be able to apply the same skills of what I'm good at to something I'm more passionate about. I believe I'd be able to create and pursue something that would better suit my personality and skill sets and really that's what it boils down to, we're all different and this has been a great learning experience of what I'm good at and also what I'm not so good at and I can apply this knowledge to any future endeavours. One important thing I'd probably do different would be to get a partner in crime from the offset!

So what I want to try do now is just find the best way to try delegate as much of the running of the business to somebody else, whether that means an outright sale, a pre-payment with a % stake, or a share split with a larger company, well that's what I'm hoping some of you may have experience and advice on