How To Sell A One Man Business

There are a lot of people out there who make terrible employees, but make really great small business owners. This person’s vision is so unique, narrow and focused that the business only works as a one-man show. The value of this type of business can be great because there are no employees to think about and the business and its reputation tightly controlled. A business like this could be a very attractive buy for a business person who is interested in diversifying their streams of income into the future. Exactly how is a purchase like this done?

One-man businesses work the same way as any other business out there. There is cash flow in, expenses, inventory, and value of property and so on. But a one-man show is unique in that the business relies heavily on that person’s relationships and reputation. That person has a very narrow, unique set of skills that other people are willing to pay a lot of money for. Buying a business like this can be complicated because the asset that you want to buy is the owner/operator of the business.

There is a way around this however. The analogy is that the owner/operator has a very unique athletic training facility that teaches a special skill. The clientele love the operator and the skills it takes to run the business are unique to the operator. That is why an exit term has to be negotiated.

You have to expect to stay on with your business a year after you sell it to aid in the transition with the buyer. The buyer can be present during the operation during that year or the buyer may hire an employee to be present. This new person must get comfortable with the operation and become familiar with the clientele. The clients will then become comfortable with the new owners as the old owner fades out of the picture.

Setting this transition period up can be mighty difficult. It is important for this transition period to have very clear rules to avoid resentment. The old owner will now be working for someone else in the business that they had created, so a very clear list of expectations needs to be drawn up before the sale is complete. A third party should be involved to mediate this negotiation. An experienced broker can mediate a deal that is fair for everyone involved while avoiding resentment.