Tips To Sell a Photo Booth Business
A 2017 Oz photo booth industry survey revealed that every year around 8% of photo booth operators in Australia decide to sell their photo booth business. Unfortunately the survey didn't ask why they were selling but from all my talks with selling operators over the years I know many were simply not able to make their business profitable enough to justify continuing. Many of these are good people and a real loss to our industry but the real tragedy is when they then flog off their business or their equipment at rock bottom price simply to be rid of it.
With just a little guidance and thought I believe there is a better way to go about selling a photo booth business and on this topic I am talking from personal experience. I ran my photo booth business for nearly 5 years and invested my heart and soul into it. This was back in 2014 with the industry growing at a rapid rate and I had been seeing for quite some time an exciting opportunity to step behind the scenes and provide affordable marketing and lead generation to help operators with Photobooth Finder (BoothCon and Booth Cover would come later). However in order to do this with no conflict of interest and the working capital to create it I realised I needed to sell up. Before doing so I did a lot of research to ensure I was going to give myself the best chance to get a fair price for all the effort I had put into it.
Essential To Know Before You Sell
Selling a business is even harder than selling a house. Houses on average take 3- 6 months. Businesses more like 6 - 12 and you (or your broker) are going to speak with lots of time wasters so be prepared to wait it out if you want to get a good return. If you are desperate to sell then do so expecting that you may not get anywhere near the true value for it.
Another really important thing to realise is there are 2 distinct ways in which to package up your business for sale:
1. Going Concern
This basically means you sell your business in its entirety so that the buyer basically steps in and takes over from you and assumes control of all aspects of the business. There are some tax implications and advantages for doing it this way and to do this you need to meet certain requirements as per the ATO's ruling on what constitutes a going concern. This is where a broker can really be of help to you and making sure you tick all the boxes.
2. Plant and Equipment (aka Liquidation Value)
This is where you simply sell physical items eg Booths, Printers, Trailers, Stock etc for an agreed value (often less than worth) and the new owner simply uses those items to create their own business or brings them into the fold of their existing business. You may or may not choose to include the sale of a website and business name as part of this method.
Who To Sell To?
There are always people out there looking to buy a business either as a new venture or to expand their existing business. Just by sheer no.s there is a bigger pool of non boothers but which ever way you go, selling to a non boother is much harder. The reason being is that anyone not in the industry doesn't have as good a grasp on what we do and the value in our businesses as a fellow boother hopefully has.
I think this is where a lot of people go wrong with selling their photo booth business. They only see and therefore show the value in their equipment and future bookings and therefore choose that method. The way with a better return is to sell as a going concern. However to do that you have to show value beyond equipment especially important to be done well if you are trying to sell to a non boother. You should have loads of Intellectual Property or if not you need to create some before you sell. By IP I mean things like procedures manuals (The 'how to" for every aspect of your business) as well as other things like websites, venue referral networks, domain registrations, logos, print materials, templates, social media profiles etc
Pros and Cons of Selling with a Broker
- They take a cut, could be a percentage or could be a flat fee, make sure you clarify this before engaging anyone
- They can get you more than you can alone
- They know how to work out the true value of your business and also how you can demonstrate that value to buyers who don't know your industry
- They guide you through the process and know exactly what needs to be done and how to do it
- Serious buyers of businesses will engage a broker to find them something suitable
- They have a list of potential buyers ready to be marketed to
- They may or may not understand the photo booth industry, try and find someone who has sold a photo booth business before it really helps when they already understand
- You dont have to deal directly with potential buyers which a lot buyers actually prefer
Pros and Cons of Selling with Gumtree or other classifieds
- No commission, cheap to advertise on
- You have to deal directly with the buyer
- Very little guidance through the sales process.
- The onus is on you and the buyer to figure it all out and make sure you do it right
- Generally not a good target market for a serious business sale, they are looking for a deal
- Can work much faster than a broker if you're desperate to sell and are happy to do a deal/sell cheaply
When I was trying to find a broker I spoke with half a dozen and interviewed in person three of them before deciding on who I would use. Just like car salesmen this space can be full of dodgy characters and I didn't want to be caught out by or have my business sold by dodgy means. I thought about also using classifieds like Gumtree but a conversation with a trusted and successful businessman lead me to consider a broker and I am so glad I did. It took a good eight months to sell but I got just under 100K for a 3 booth business and whilst it was less than what I was initially advised to list it for ($125 - 150K) it was considerably more than I had seen many other similar businesses go for.
If you do decide to sell your photo booth business, firstly let me just say I am sad to see you go but if you do go please plan your sale and make sure you get a worthy price no matter which way you sell.
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Disclaimer: While every caution has been taken to provide readers with most accurate information and honest analysis, please use your discretion before taking any decisions based on the information in this blog. Author will not compensate you in any way whatsoever if you ever happen to suffer a loss/inconvenience/damage because of/while making use of information in this blog.
(Photo Booth Blogger: Justin Jowett)
(Image Credit: Matt Lodl via Flickr)