Looking for broker who can help us sell an owner-operated (no employees) swimming pool supply retail store. Arizona.

My father has been running a swimming pool supply store for 22 years, and it's time for him to retire. We really need YOUR HELP to sell the business, ASAP. The several brokers we have already tried working with have put in zero effort (just posted some lazy ads on bizbuysell). We need to find a broker with a more effective approach -- maybe by finding and contacting potential buyers.

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Hello beautiful/handsome brokers of Reddit,

My father has been running a swimming pool supply store for 22 years, and it's time for him to retire. We really need YOUR HELP to sell the business, ASAP. The several brokers we have already tried working with have put in zero effort (just posted some lazy ads on bizbuysell). We need to find a broker with a more effective approach -- maybe by finding and contacting potential buyers.

The business has a few interesting characteristics:

It's an "essential business" and has been mostly unaffected by COVID-19.

It's a very low-tech business. My father never implemented any computer-based systems in the business. Everything is done manually.

The business, in its current state without employees, is great for someone who wants to "buy a job". Great for someone who wants to "be their own boss". Great for someone who wants a stable income during these unstable times.

It's a central hub for pool routes, repairs, and installations.

Business Core Stats:

Financial records are good, up-to-date, and available.

Cash Flow (my father's salary, plus remaining profts) is $65k.

Revenue is $200k.

Inventory is $45k.

Rent is $3100 per month.

Established location (40 years) with stable customer base.

Our current asking price is $100k.

Will train buyer.

Can do seller financing.

More details about the business: It's a retail store in Phoenix, Arizona, surrounded by neighborhoods full of swimming pools. We sell chemicals, motors, pumps, filters, cleaners, we do repairs, water tests, etc.
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This is your main problem here. Not many people would want to (or even could) pay $100,000 to get a $65,000 full-time job (unless your Dad is able to keep this going on significantly less than full-time hours even though it's a store and he has no employees). Especially not with the current economic situation.

Is $65,000 a nice salary for most people? Sure. Do some people like the idea of working for themselves? Sure. But if they have to put in 40+ (or even 50+ since there are no employees) hours a week and also lay out $100,000 to get that "salary" (which is not equivalent to a normal employee with that salary because this buyer would owe self-employment taxes that a normal salaried employee wouldn't), it isn't as worth it. Most of the people who have that type of money are either well off or older (and thus in your dad's position of soon wanting to retire). I know you mentioned seller financing, but think of how long $100,000 takes to pay off - and they'd have that burden alongside trying to run a business in this economic situation.

Obviously your Dad is welcome to try to sell for whatever he'd like, but if he really wants to sell it ASAP, I think he needs to drastically lower his price. This is probably one reason (of a few) that brokers aren't putting in legwork. Another reason being it just isn't a big sale for them (especially at the actual price it could likely trade at).

Other points

65k isn't near enough profit to attract a buyer. Best option would be give it (sell for $1) to someone he trusts to run it and have a written contract for 5-10% of the profits for the rest of his life. It's a losing proposition to pay $100k for a business generating $65k of profits. Maybe find a national chain and see if they will make you all an offer for your client list and inventory.

OP, your best bet finding a buyer is probably someone else in the local pool industry, especially with selling a small business like this. Try talking to the pool companies that use your store and see if they'd like to a retail location to their business.

Your other option is to hire a smart employee, teach them the ropes, and semi-retire. If you hire the right person, you might be able to set up an arrangement where once they're ready they take a salary+part of profits and your dad takes part of profits for a certain number of years, after which the business is theirs.

Question asked by

u/likebike2

Date

July 13, 2020, 1:43:38 PM

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