Home – New Forums Other discussions Attention sole traders looking to retire/ sell out of their small business

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  • #991206
    Gronky
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    Hi,

    This is my first post to the FS forum.

    I’m working on a business broker platform that links newly qualified apprentices with sole traders looking to retire, slow down or generally time to put your feet up before you get burn out!

    The platform will allow businesses to list, display their assets for sale (e.g. Client list, domain name, phone number etc). Instead of a traditional transaction on a WIWO basis, the platform supports for apprentices to work ‘in the business’ for a trial period before taking up the option to purchase the assets, trade and grow the business.

    The initial focus is blue collar trades but will expand out to admin, technology and service sector.

    Looking for feedback from sole traders (young and old) for validation the business platform is meeting a need in the market.

    Your feedback would greatly appreciated.

    Regards,
    Patrick
    Founder, The Masters Apprentice

    #1180446
    bb1
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    Gronky, post: 210427 wrote:
    Hi,

    This is my first post to the FS forum.

    I’m working on a business broker platform that links newly qualified apprentices with sole traders looking to retire, slow down or generally time to put your feet up before you get burn out!

    The platform will allow businesses to list, display their assets for sale (e.g. Client list, domain name, phone number etc). Instead of a traditional transaction on a WIWO basis, the platform supports for apprentices to work ‘in the business’ for a trial period before taking up the option to purchase the assets, trade and grow the business.

    The initial focus is blue collar trades but will expand out to admin, technology and service sector.

    Looking for feedback from sole traders (young and old) for validation the business platform is meeting a need in the market.

    Your feedback would greatly appreciated.

    Regards,
    Patrick
    Founder, The Masters Apprentice

    Ah do you have a url

    #1180447
    Gronky
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    bb1, post: 210429 wrote:
    Ah do you have a url

    The site is still in development. Looking for validation of concept at this stage. Would you use a broker like this and refer other sole traders in a similiar situation?

    #1180448
    bb1
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    Gronky, post: 210430 wrote:
    The site is still in development. Looking for validation of concept at this stage. Would you use a broker like this and refer other sole traders in a similiar situation?

    I can see the benefits for the apprentice, gets to try out the business, and if they like it, take up the option.
    The drawback I can see for myself is you are open to tyre kickers and time wasters just looking to fill in X months of time and than move on.

    As an example you broker a deal between me and joe blow, that joe works for 6 months than has the option to buy. I teach joe the ropes for the 6 months, he learns all my tips and tricks, gets familiar with my client list. 6 months is up, and Joe says no not interested, but has gained heaps of experience, great benefit for Joe.

    but for me I am 6 months down the track, invested time in Joe, because jobs just take longer when trainging someone, I still want to sell the business, but Joe is gone I have paid my money to you, and I have to start the sales process again. Plus I run the risk that Joe takes of with my client list, and approaches them on the side.

    I can only see benefits for the prospective purchaser and heaps of drawbacks for me, who after 6 months am left trying to sell the business.

    Initial thoughts are no

    #1180449
    Gronky
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    bb1, post: 210431 wrote:
    I can see the benefits for the apprentice, gets to try out the business, and if they like it, take up the option.
    The drawback I can see for myself is you are open to tyre kickers and time wasters just looking to fill in X months of time and than move on.

    As an example you broker a deal between me and joe blow, that joe works for 6 months than has the option to buy. I teach joe the ropes for the 6 months, he learns all my tips and tricks, gets familiar with my client list. 6 months is up, and Joe says no not interested, but has gained heaps of experience, great benefit for Joe.

    but for me I am 6 months down the track, invested time in Joe, because jobs just take longer when trainging someone, I still want to sell the business, but Joe is gone I have paid my money to you, and I have to start the sales process again. Plus I run the risk that Joe takes of with my client list, and approaches them on the side.

    I can only see benefits for the prospective purchaser and heaps of drawbacks for me, who after 6 months am left trying to sell the business.

    Initial thoughts are no

    Best,
    This is great feedback that I will incorporate into the plan.

    I am designing into protections for seller so there is more upside and downside is mitigated. Examples are shorter trial period then apprentice must opt-in to purchase. if joe was to pull out then TMA could purchase and match with another apprentice. The contract would have non-competition clauses prevent apprentice from starting side business in same area. The main upside is that the sole trader is able to get value out of a business he/she has worked many years instead of just walking away with nothing.

    Once again thanks for insightful feedback from ST perspective.

    #1180450
    bb1
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    Gronky, post: 210438 wrote:
    Best,

    Bert

    Gronky, post: 210438 wrote:
    Examples are shorter trial period then apprentice must opt-in to purchase..
    The problem you will face here is a trial period that is suitable for the apprentice and one for the sole trader. Say you cut it to 2 months, if I was the apprentice I would say its to short, and if it was 2 months I as the person wanting to sell, would say it is to long for me to have to start on my next sales campaign.

    Not sure how you can anyone interested if the “must opt in” kind of defeats the purpose of the try before you buy concept I thought you were aiming for.

    Gronky, post: 210438 wrote:
    if joe was to pull out then TMA could purchase and match with another apprentice. .

    So are you saying here that TMA would purchase any small business that the apprentice walked away from, hope you have deep pockets. But I like this approach as the sole trader is at least guaranteed a sale after a given period, instead of going back to square one.

    Gronky, post: 210438 wrote:
    The contract would have non-competition clauses prevent apprentice from starting side business in same area. .

    We all know that there are limitations to non compete clauses, you will get the legal guys who argue it either way, but would I as a sole trader trust that. Sorry we have all seen non compete clauses which have not worked.

    Gronky, post: 210438 wrote:
    The main upside is that the sole trader is able to get value out of a business he/she has worked many years instead of just walking away with nothing.

    Not sure why you think we would walk away with nothing there is still the traditional method of selling the business. In my currently chosen trade at least most that I am aware of are turning over in a 6 week period, and not even with a lot of advertising.

    #1180451
    Greg_M
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    I can really only comment from the perspective of the industry I’ve worked in for a long time (construction).

    I think the idea has some merit but would be very difficult to implement successfully.

    In construction there is very little ‘direct’ employment, tradesmen usually finish up in some kind of ‘contractor’ situation – either pyramid subcontractors for a larger business or building up their own business from scratch.

    So your idea could potentially give a newbie a bit of a head start on a common option.

    Also as someone who has exited from contracting it has some appeal as a way to exit gracefully and perhaps even get a return on assets.

    BUT … here’s what I see as the downside.

    – Newly minted tradesmen rarely have what it takes to survive and make a profit in a very competitive industry.

    – There is no “goodwill” in building businesses unless they’re very large, the business is normally based on the ability and personality of the person driving it. It would be virtually impossible to guarantee a “client list” or work on hand. The only exception to this would be maintenance type businesses, e.g. in plumbing and electrical where a licence is required to operate and repeat business is common and has been marketed well by the business owner.

    -The fixed assets usually don’t have a great $ value to the purchaser unless the business has major specialised plant and equipment specific to the trade i.e. it’s not hard to buy a van or ute, go to Bunnings and buy the basics (many apprentices will have acquired a substantial set of gear while serving their time anyway).

    – How would an apprentice/new tradesman finance the deal anyway? Most 20 somethings fresh out of their ‘time’ won’t have a cracker to spend on anything but the next night out.

    How I exited active contracting I think is typical of how it usually is done.

    I had a ‘senior’ tradesman and long term employee who was already known and trusted by regular clients and was interested in continuing the work … a side deal was done (pretty much at cost) on the serious items of plant (read expensive to replace new), a lot of peripheral gear was just thrown in ( I no longer wanted a yard full of crap). There was no goodwill and no formal sale of the business, we just swapped chairs.

    He managed to retain 90% of the regular clients (still does 8 years on) and I continued to work for him on an ad hoc basis that suited me (still do occasionally).

    I know a lot of players with 20 plus years in building that would sell up at cost in 30 seconds if they could, I think your real challenge will be to find buyers that are interested.

    Maybe other trade sectors are different and your model would work well, good luck with it.

    Cheers Greg

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