When selling your kitchen and bath installation business, an important question to answer is: ‘What exactly am I selling?‘ Certain parts of your business are a given. However, others might be up for negotiation or even part of a completely different sale.
Some things, like employees, can be transferred if the person wants to stay with the new owner or get hired by the company taking over your business.
However, in California, you cannot really “sell” them. What is involved in selling a kitchen and bath installation business? Here are a few of those things.
Your Name
Generally speaking, unless you are part of a merger or consolidation deal where another company is acquiring your company, your name typically remains with the business. Even in most mergers, the acquired company ceases to exist. It will no longer have its own assets. More on that in a moment. Although you are free to start another company if you would like, it is most likely that the name of the company you currently own will no longer be an option for you.
Why would someone want your name?
Your Reputation
The most significant part of your name is your reputation. The buyer wants your business because it is steady or, better yet, growing. You already have a good reputation in your community. If they wanted to start with a new name, they would probably start their own business from scratch.
Your Contact Information
Your phone number is also significant. It is how people reach you, and it is likely already reflected in marketing materials, business cards, and advertisements. The same is true of your website, email addresses (at least your general ones), and even your fax line.
Why is this important? For people to continue contacting your kitchen and bath installation business, including repeat customers and those they refer, your contact information must remain consistent and accurate.
Equipment and Assets
The trucks you own, the equipment you have, all of those things go along with your business. While employees may have their own sets of tools, there are likely shared tools that stay with each crew. These types of things are essential to your business.
This should be especially true of safety items and other training materials. This also includes shop space and real estate, whether you own that space or the new owner will take over your lease. In that case, be sure your landlord meets your buyer and approves of them continuing your business there.
Typically, this includes phones, computers, and other office supplies, unless your deal stipulates otherwise. A buyer will have certain expectations, so be sure that you understand them.
Current Inventory
While you may not keep a lot of items on hand, you likely have some standard sinks, tubs, and other plumbing supplies that you need for almost every job. These things also apply to your business, so ensure that your inventory is current and accurate. Be sure it is updated whenever you make an order or use something on a job during the sales process.
Often, valuing your inventory is one of the last steps you take when preparing to sell your business.
Reports and Customer Lists
All the data you have collected goes with your business, with some exceptions. Email lists and other records sometimes require customer approval before being transferred to a different owner, to protect their privacy.
However, social media profiles, contacts, and other simple prospecting lists that do not include personal information are typically just part of the sale. Be sure to familiarize yourself with the law in your area before simply handing over customer lists, though. You may need to email or mail a notice to those on your list or in your CRM once the business is sold. This allows them a chance to opt out of future contact if they wish.
Cash and Debts
This area is a little trickier. Sometimes, your accounts simply transfer over. The new owner not only takes possession of current customer invoices that remain unpaid but also of inventory purchases and other outstanding short-term debts.
However, if you took on certain large, long-term debts, such as working capital to run your business, you may still be responsible for that debt. The assumption of debt and accounts payable is typically a significant aspect of the business purchase negotiation process.
Miscellaneous
Each business is different, so there may be several things that you wouldn’t normally consider as part of the sale of your kitchen and bath installation business. Think of it this way: anything that has the business name on it, that the business owns, or that is essential to the operation of the business generally goes with it.
There are, of course, exceptions to every rule, and every business sale is different. When you are trying to figure all of this out, it is helpful to have professionals on your side. A business broker can help you understand what goes with your business and how much it is actually worth.
That’s the key to all of these things: getting a reasonable business valuation so you know how much you can sell it for. If you are in the Sacramento area and looking to sell your business, contact Rogerson Business Services today. We can help you through the entire process until you find the right buyer for your kitchen and bath installation business.