One of the most interesting things about researching our new Done Deal series for this site has been discovering how common it is for the person selling the business to lend part of the money to the buyer.
It’s called “vendor financing” and for the sale of smaller businesses, it has become common. Basically you mutually agree to what the company is worth. The buyer then pays you a portion of the money on closing, with the other chunk paid to you over time with interest (the rate is negotiable).
When I started to contemplate selling my last business, I was looking for data on what similar private companies were selling for. The media reported big company deals, but I knew they didn’t bare much relevance to my situation.
When I did hear about a private company sale, the details were never released publicly. Sometimes, the selling price was announced but rarely would they include the details of the multiple paid or the terms the sellers agreed to. >> More
When I told my wife about my plans to send you this email to encourage you to pre-order my new book, her response was, “Nobody pre-orders anything.” Her point was that people want instant gratification, and so when you find out the book doesn’t ship until April 28, you’re going to be turned off.
Fair enough, but bricks and mortar retailers decide how many books to stock on their shelves based on pre-order volumes from sites like Amazon. If a lot of people are pre-ordering a new book, Barnes & Noble (and Indigo, Powell’s, etc.) figure the demand is strong, and they get it on their shelves for opening day. So your pre-order now may translate into lots of bookstore customers down the road and is therefore a compelling enough reason for me to ignore my wife’s typically sage advice—just this once, I promise. >> More
As you know, I’m a big believer in recurring revenue as a way to make your business more sellable. Recently however, I got an interesting email from a reader who asked me about the pitfalls of switching to a subscription-type model:
John: I was led to your website and comments while searching for information on the business pitfalls of converting to the subscription model. The benefits seem clear to me, but I need to do a better job of addressing the potential dangers and difficulties, before I take it to my management team (and Advisory Board) and win their buy-in. If you’re willing or interested, is there a way that you can help with that? >> More
