Over the past month to 6 weeks, I became aware of a VERY good business opportunity. It was an on-line B2B business. All orders were faxed directly to the manufacturers represented, and a commission was paid within a few weeks. I had put some money down on this business, and I met with the present owner. At the end of our meeting, there were some “details” to clean up. One of those details was making an additional installment. When my “hand” couldn’t write the check, we soon parted.
Why I became interested in this business?
- Guaranteed revenue stream. Although margins seemed to be suffering, it still seemed to generate a low 6 figure income.
- It was a nice niche area. There are distributors and retailers that provide this product, but this site enabled a customer to get the freshest product directly from the manufacturer.
- Home based. Since everything was drop-shipped, the business could be operated from anywhere.
This is why I couldn’t go forward:
- My original agreement had a payment schedule. The existing owner (let’s call him Fred), wanted to revise the schedule. Even eventually agreed not to revise, but this went down into the column where I was developing Fred’s profile.
- Another part of the agreement was Fred was going to stay on for a period of time and he was targeting some customer and manufacturer goals. Once these goals were reached, he would receive an additional bonus on top of the sales price. The payment schedule for this was also spelled out in the agreement. He wanted to modify the agreement on these points. And, there is nothing wrong with doing this, but the original agreement would no longer be valid.
- Our agreement was a piece of paper that no business lawyers had looked at. It had holes and “outs” for either side. Both of us knew this. At our first meeting, Fred mentioned that an attorney jokingly told him, he could just keep my down payment, and have no legal obligation to return it. And, I countered with, if this doesn’t feel right, I am content to call this down payment my “mid-life crisis”. Translation: Neither of us gave much credence to the contract.
- The website needed rewritten. I have many changes from my existing website (www.signsseen.com) that I wanted to bring to this website. And, although Fred didn’t say not to, I believe in his capacity he would have been a barrier to getting some of these changes completed. And, the Fred “negative” column was beginning to get a few bad marks.
- Fred didn’t have much of a plan to get things moving forward. As Fred and I talked, I saw Fred taking my money for buying the business and then being able to play with my money as he tried out his ideas. We can get telemarketers; we can get distributors and not manufacturers; we can cut the commission rate; and we can do some other costly thing to the website. As I continued to listen, I heard no budget and no guarantees. I heard a spaghetti on the wall approach with my money that was already being stretched with the purchase of this business.
- The business brokers were involved. As I was driving down to our meeting point, Fred called me and told me a business broker had a buyer who was willing to spend more than I had offered. After receiving this info in a “crackled” form, I dipped into a valley and lost the signal. And, when we talked again, I had enough time to become concerned as to where this whole thing was going.
- All about the money. The arrangement was to pay for the business on a schedule. And, once Fred had completed additional sales efforts, the pay schedule would kick in for his sales efforts. Knowing the broker was out there and knowing how quickly Fred wanted to completed his sales [it would be a year before he received full payment], I could not help but classify his motives as “anxious to leave the business”.
And, in light of all of these things, I was concerned his involvement for even the next 6 months would be difficult to manage. I didn’t not want to place my existing business in danger, and the financial strain of the purchase plus managing a rather ambiguous Fred, made leaving the best option.
Fred has called the brokers and hopes to have the business sold very soon. I look forward to receiving my down payment check back. [Fred said keeping it would be bad karma.] And, I anticipate incorporating many of the processes used by Fred into some of my websites.
Am I dissapointed? Yes. Is Fred disappointed? I am sure. But, if Fred wanted the money and I wanted to inject some freshness into my site, we are both winning–I think…..