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Sep 01
2020

Going Out of Business? Sell Your Customer List

Posted by: Steve Marr

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With the COVID-19 virus devastating our nation, many businesses are forced to close. Businesses scramble to sell off assets for the best possible price. Unfortunately, it is difficult to make much on a quick sale. However, the business probably has a customer list that may be of value to others. 

Recently, I talked to a couple of business owners who needed to close their businesses.  The first was a landscaping business in a state that required businesses to close for several months. The owner did not have enough cash reserves to continue operations. The business had grossed approximately $200,000 in 2019. I helped them present the value of the mailing list, and he was able to sell the list for $12,000. While it was less than what the business made in 2019, it was better than nothing. The business that bought the mailing list also purchased some of the equipment.  In addition, the same business offered the owner a position as a crew supervisor which provided an opportunity for his employment. 

 

The second person operated a small gym.  This business was also forced to close for several months.  Unfortunately, the gym owner was unable to afford the rent and ongoing expenses. The general owner was able to negotiate a $1,500 payment for his client list which allowed the new owner to solicit transfers of gym memberships. While this is a tremendous bargain for the new gym operator, $1,500 for the seller is better than nothing.

As any small business owner understands during these difficult economic times, businesses must be ready to accept arrangements they would have rejected six months ago. When circumstances change, it is important to adjust to the new reality.

In Scripture we see an example. “This is what the LORD says: ‘As the shepherd snatches from the mouth of the lion two legs or a piece of an ear, so the Israelites dwelling in Samaria will be snatched away with the corner of a bed or the cushion of a couch.’” (Amos 3:12, NIV) In some situations, options are limited. One of my business professors told us long ago, “There will be days in your profession where all choices will be negative. Your job will be to select the least bad option available.”

When the least bad option is closing your business, spend time to recoup whatever you can by selling your client list and reaping the benefit from your customer relationships.

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