Here’s a tale of two cafés. Both are within walking distance of the startup blog office. After a while I noticed a few things changing in my favourite of the two. The decore, the Barista and eventually the clientele all changed.
Coffee is personal. The caffeine, hot steamed milk and the chocolate sprinkles are only part of the experience.
So I moved to the café up the road. I’d even walk past the other café to get my ‘new’ caffeine haunt. It was pretty obvious that the first café had lost its cache and customers along the way. I still trades, but not nearly as well.
Then I discovered the owner actually sold about the time everything started to change. The new owners put their spin on things, tried to improve it…. fully leverage the ‘goodwill’ they purchased. Seems the opposite has occurred.
And so it is with restaurants and cafés alike.
The owner is the goodwill.
People buy coffee from her. Her greeting, her skill, the ambiance she created. It can’t be passed on. It can’t be bought from a sole trader.Exceptions such as coca cola, big macs and starbucks grande lattes are already replicated thousands of times…
When buying a business from a sole trader – Goodwill? – No such thing.
How often do you see a business up for sale unable to sell because the owner has put so much blood, sweat and tears into the business that they feel they’re owed a fair chunk of goodwill to compensate. Do they ask, what is the buyer really getting? How much of the success of the business was due to there personal touch. Hard to quantify in any business. I prefer to look at the cold hard facts and numbers and then start subtracting rather than adding on…..
I am an accountant and business advisor in the UK and this is something that happens all too often.
Someone starts a business and embeds themselves into its fabric, result they are the business.
Then when they come to sell they don’t understand why it’s so hard.
I would always advise, as soon as the business is stable and doing well look to put a management structure in place, even a coffee shop can have a manager or senior coffee waitress, it doesn’t really matter what you use as the label, as long as it is not you the business owner that everyone has contact with!
Oh crap, my own business model looks less impressive now 🙂