I have another couple cents to throw at this.
When I was new in the business, I was only 2/3 finished with my RPT exams
and decided to purchase a business from an RPT who was called into the
ministry. I didn't know enough to find out more about his clientele and
purchased the business with 50 cents on the dollar on his lastest year's
receipts. The list of clients was not as accurate as I had hoped: many
dropped out of sight from mailers we sent out, many who I could contact
either sold the piano, had no interest in tuning it, the dreaded, "nobody
plays it anymore! sydrome", had died, just called someone out of the
yellow pages, or wanted someone with an RPT status. On the better side, I
did get some very good customers out of it, who were loyal for the 12
years I worked it, but I would never have settled on such a high price in
hind-sight. I think selling a business would, at best, get about 20-30
cents on the dollar of recent year's of business. I would check out the
last 5 years and average the total income. The one to buy it must be
close to the same kind of personality and if the seller was an RPT, only
sell to an RPT. Tools were not offered to me on the purchase price, and I
would want to, if purchasing again, to include those as well. (The man
came back a few years later and started doing business.Again!..I'm afraid
with some of the same list he sold me!! but never can prove it...except
for a small music store)
After 15 years, I left for my current CAUT position. I was sooooo spread
out over NW Washington state, that I couldn't have sold the business as a
whole business...I drove 40-50000 miles per year and more ( a lot in the
Seattle area.) Since I drove to the Olympic Peninsula, Bellingham, etc,
and some of his clients were in Renton, nobody in their right mind would
have purchased the whole thing...besides, I lived on an island!) I could
have sold the business in chunks of realestate, but decided not to. Due
to the very fast move(4 weeks notice!!) to Nebraska, I just referred my
best customers to very good RPT's in their area and alerted some other
RPT's that they should line up something with others that I had no time to
reach. Kind of a bummer for me as, if time allowed, would have grouped
some clients together and "sold" them. I really don't know how you can
really sell "customers". They might or might not stay with the "new guy".
I stay in contact with some of the best of my old clients,...some are
happy with their new tech, and some never have been happy with anyone they
tried out (mostly the island people)...there wasn't too much to choose
from on the island.
To sell a long standing-personal-one-on - one relationship to somebody new
is a really difficult thing to place a price on... For those of you
getting ready to retire, or sell a business, I would definately set up a
business "apprentice" to 'slide' in gradually to get repport with these
clients...nobody likes a 'sudden' change who takes care of their
"baby"....whether it's a Steinway D to the little Besty Ross spinet..they
all mean something to the customer!! Please tread carefullly into this.
If you want to contact me off-line, please do! pwilliams4 at unl.edu
Best of luck!
Paul
"Farrell" <mfarrel2 at tampabay.rr.com>
Sent by: pianotech-bounces at ptg.org
03/01/2009 05:53 AM
Please respond to
pianotech at ptg.org
To
<pianotech at ptg.org>
cc
Subject
Re: [pianotech] The value of a customer list?
Hi Dianne,
I have an experience to share, maybe it will be of value. During about my
second year in business, an olderly local long-time tech passed away
suddenly. His widow wished to sell his business. I bought it as I was new
in the business and was eager to expand my customer base.
The tech's son added up the service sales for the past year. I paid 50
cents on the dollar of the past year's sales for his box of 3x5 cards
(client name, phone, address and piano service history) and a letter of
introduction sent by his widow to each customer in his database ("I wish
to introduce you to Terry who will do a fine job taking over services for
my husbands piano clients.....").
I found that the arrangement worked well for me because I had the need to
expand my customer base AND I could easily absorb the additional work - he
was semi-retired and only did $10K of service work the previous year.
Looking back on the arrangement, if anything, IMHO, the price I paid was a
little on the high side as about 2/3 his client base scheduled
appointments with me.
If I was more established or his business was larger, his business may
have been of less value to me. IMHO, a business of this nature is worth
less than some may think - maybe somewhere in the 25 to 50 cents on the
dollar would be closer to actual value.
Hope this helps.
Terry Farrell
----- Original Message -----
From: Diane Hofstetter
To: pianotech at ptg.org
Sent: Sunday, March 01, 2009 3:51 AM
Subject: [pianotech] The value of a customer list?
John Cook, RPT, Portland, OR Chapter, passed away recently after a sudden
illness. John was a gentleman and a fine technician. I liked him a lot,
but am leaving it to others who knew him more than I did, (since I have
only known him a short while), to write more about his life.
Why I'm writing here is to ask your collective (and individual) advice for
his wife, Fran, who needs to sell his business. What Fran needs help on
most is his customer list. She wants to sell it to one (or more)
responsible technicians who do the same high quality service that John
did, at a price that is fair to both her and the buyer.
I have researched the archives and printed out the answers to a tech who
wanted to know the value of his business because he planned to retire. Our
chapter president has contacted home office, but, according to Fran, they
could not give her much help. So, we hope you all have some actual
experiences, or creative ideas, to help Fran out.
Thank you,
Diane (who will show Fran how to subscribe to pianotech)
Diane Hofstetter
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