I know there is a ton of information online about purchasing a small business, but I wanted to see if anyone here has any opinion or advice. An opportunity just came up recently that is very intriguing – it’s funny that it happened just a week after I posted the “Making hay while the sun shines” post…
http://forum.mrmoneymustache.com/welcome-to-the-forum/making-hay-while-the-sun-shines/msg275223/#msg275223The opportunity:
A small travel company that runs some short regional tours in the USA of 1-5 days plus 1 or 2 longer trips in a year, within the US or Canada. About the maximum that could be made per day of touring is $1000. The current owners are semi-retired and only ran 30 days of tours per year recently. In the hey days they ran 100 days of tours per year. Obviously, the non-tour days are needed for planning, bookkeeping, publicizing, etc.
The purchase:
There are no tangible assets. To purchase the company would be to purchase only the name of the company, the training by the previous owners with close to 30 years of expertise, and a client list of 600 people. This company has previously been running off of their client list and word of mouth. The only advertising is quarterly mailings and a very basic website. They are retiring because they are in their upper 70s and health is slowing them down.
No purchase price has been discussed yet.
My situation:
I work in a corporate job and have a pretty cushy deal to the point I’m able to save about $140,000 after taxes and expenses. Plus I get health insurance and 6 weeks of vacation.
However, I’m starting to hate some things about my job and the chance that things are going to get really bad in the next 1-3 years is high due to a huge project that is going very poorly.
Until this opportunity came up, I was seriously thinking about working for 2 more years, saving another $300,000 or so, and then semi-retiring – going abroad, peace corps, teaching English, guiding trips, etc. I have been away from family for my entire working career and this company is located near my family – parents, siblings, nieces, and nephews, so that would be a benefit to move back. I absolutely love traveling, including the planning of it so this is in my wheelhouse. It’s probably not the exact segment of business I’d like to be in – I prefer a bit of adventure and this is geared towards senior citizens. That being said, they go to a lot of shows and go to some really offbeat places that would be pretty interesting to me. Also, I would probably still go on a 1-2 month trip each year to quench my adventure travel thirst.
Questions:
Any general opinions?
Given the description, what sort of price would you put on the business? There’s still a lot of due diligence I need to do, but assuming the above info is true, what would be your guess?