Craig Ridley, Head Business Coach at YourBusinessCoachingClub said today that personal services businesses such as personal training businesses can be difficult to sell for a reasonable price when the owner is ready to exit.
“Many personal training businesses are closely aligned to the personality of the owner” Mr Ridley said. “When it comes time to sell the business, this alignment to the owner will reduce the value of Goodwill a buyer is prepared to pay for as they see it as a risk to the future profitability of the business.”
In a note to members of YourBusinessCoachingClub, Mr Ridley outlined a number of issues to consider when a small business entrepreneur starts to think about selling their personal services business. These included:
It is the buyer that will ultimately set the price of a business and if there is only one interested buyer at the time of sale, the eventual price may be lower than what the seller thinks is a reasonable figure.
A business buyer is looking for a return for effort (they will want to earn a commercial salary for the effort they will need to put in to run the business) and they will want a return on their investment (with an expectation that return will be higher than they can get from other asset classes given the higher risk level in a business investment).
Aligning a business such as a personal training business to the personality of the owner is a two edged sword. It makes great business sense to use the owner as a marketing tool where they can make a celebrity of themselves. This business branding is likely to improve the profitability of the business. However, when it comes time to sell, the challenge for the celebrity owner is to convince the potential buyer that the business will continue to be successful when he or she moves on.
It is important that the personal training business develop some value in the brand and the systems to pass on to a new owner.
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