 | | Randip Singh |
Success Story:
Houston Business Journal Follow-Up on a Business Acquisition
Sold Date: 7/31/2009
Listed by Doug Ashby
Sold by Rose Stabler
Sold in 59 Days
U.S. Global Mail owner grows good idea into a multifaceted company
After leaving his corporate job as a CFO, Randip Singh learned firsthand that the process of buying an existing small business can often be as gut-wrenching as starting a new one from scratch. He also learned the events that follow when new leadership takes over can be a critical lesson in self-control.
Motivated by the success his wife experienced with the purchase of a cloth baby diaper manufacturing business, Singh decided a few years ago that he was ready to leave the corporate world and give entrepreneurism a try. For nearly a year, he searched for available businesses using the Internet and business brokers. During one of his Internet searches, he stumbled across a retail global mail business that had started dabbling in mail-forwarding services for expats living abroad. Singh was dazzled by the possibilities for growth.
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 A Business Is More Valuable When The Owner Is Replaceable
Most potential buyers would be averse to purchasing a business if the owner's shoes are too big to fill or if the owner's hand would be too difficult to unravel from the operation.
When preparing to sell or build value in a business, the owner should not be so involved in the business that it would be difficult for would-be buyers to see the business as being productive under new ownership. Buyers want the owner to be replaceable.
Three things about value:
- Value is dependent on risk
- Value is not about what the business is worth in the current owner's hands, but in someone else's.
- The more dependent the business is on its owner, the higher its risk, and the lower its value.
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Ask the Experts
Question:
I'm looking for an owner-absentee business to purchase, but I don't want to work much in the business. Do you have any opportunities that match the criteria I outlined on my Buyer Registration Form?
Answer:
When buying a business there are basically two types of owners you will encounter. The hands on owner that is involved in the day to day operation and actually works at the business and the absentee owner that hires someone to run the business for them. There are benefits and disadvantages to both scenarios but for now, let's look at the pros and cons of buying an absentee run business.
Potential buyers contact me all the time wanting to know more about buying an absentee run business. It sounds too good to be true, right? You buy a business, hire someone to run it and the profits end up in your account. Sounds like a no-brainer, who wouldn't want that? Well, it's not that simple and absentee ownership comes with both pros and cons.
Read the Rest of the Article on BizBen.com
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