Forum Moderators: LifeinAsia
He started selling so many widgets for this company, that his back-end work (accounting, customer support, order maintenence) drained all the profit (and time) out of his business.
So here he was...with an online "business" (sales from his website, a few other sites that sold his product, amazon, yahoo store, ebay store sales) that was making TONS OF SALES for this larger corporation, but making little profit himself.
Bogged down and frustrated, he decided it wasnt worth it anymore. He would be better off not selling ANYTHING for this larger company, and using his time pursuing other opportunities.
BUT WHAT ABOUT HIS 'SALES SYSTEM'?
His sales system produces a large quantity of sales for this larger company, but it's useless to him. What to do now? This is currently where he is at.
He's mentioned a few options to me and some of his other advisors. I want to hear what the webmaster community thinks:
Form a plan to get this 'sales system' installed under the roof of the larger company and let them have all the sales, customer support, shipping, issues, etc.
Charge them a set-up fee (how much?)
or
Charge them a royalties fee (how much?)
The problem with a set-up fee is it is a one-time installment, and the last few years of work are now done and paid for. The question is, will this company be willing to shell out a LARGE 'set-up fee'? Say, over a year's revenue?
The problem with a royalties fee is the fear of this large company evenutually losing focus/interest in his sales system, and his royalties being peanuts, because it's not being maintained properly. Obviously, no one can run this sales system better than my friend, and he's worried the big company could screw it up, and is nervous about commissions from future sales.
Another option he has mentioned to us is to just keep his sales system running, BUT get the larger company to just pay him a fixed amount (per month?) to help offset all his costs that are draining his profit. He's already getting their best rates in terms of product discounts that he is selling for them, so they wont budge on that.
Just curious to hear what others think, or if anyone has been in a position to sell their niche business to a larger company.
Hubes
Two of the "other factors" are: 1) Is his company a significant source of income for the larger company? If so, they would not want to see him go under. If not, they probably don't care: other sites will come in to fill the space. 2) What does your friend want to do for a living? Is he happy doing what he is doing, if it were profitable? If not, then he should move on. If he still wants to sell online, he should branch out...start selling similar accessory items or even the same type of widgets from another company.
Without knowing specifics, it is hard to know which option is best...but I can't imagine a scenario where the royalties fees or the fixed amount will work...it doesn't make sense from the larger company's perspective.
Youll only have prblems wih them in teh long wrong causing you many headaches.
The large company's objective should be to buy this "infrastructure" from your friend and then use his expertise to train in house people to run the system once your friend is out of the picture.
The other thing your friend could do is find a way to "package" this service to sell to this company and others. Find a way to sell what he knows and not what he does.
Fortune Hunter
If your friend is really successful with his "system" why can't he get in the business of selling this information to others as opposed to operating the system himself.
Fortune Hunter
