How to sell my small business?

Dear Dave,

I have had a small business for over two years. I’ve not yet made a profit because I’ve put all the revenue back into the business. I took out an equity loan of $40,000 to start up the business and at this point I have roughly $40,000 worth of merchandise. Now I want to sell it. What is the best way to sell it? What do you think I could get for it?


Grand Rapids, Mich.


Most small businesses sell to one of the following: customers, competitors, or suppliers. Look to these types of people for your transaction. From what you tell me, your business is worth book value; or $40,000 at the most. You have never made a profit so there is no cash flow with which you can up the value of the business.

Never having made a profit and being in business such a short time, there is no additional value or what is called ‘good will’ of the business. When you turn the key and walk into the store, what you are surrounded by is the worth of the business (i.e., merchandise and equipment). You can not sell potential to a sophisticated buyer. They can go get that on their own.


Separate income, separate accounts?

Dear Dave,

My husband and I have been working as independent insurance agents for about five years. Before that I was also doing some part-time house cleaning as well. I had a separate account, and he had his separate account. All of the house cleaning money went into my account and my half of the commission check from the insurance went into my account, as well. My husband pays all of the big bills like the house payment and the car payment and I pay for the groceries and the little things that come up. I don’t feel real comfortable with this, but every time I try to bring it up he just says that it would be too confusing any other way. Do you have any suggestions on how I can convince him to have just one account for both of us?


Oklahoma City, Okla.

Dear Dee,

Here is an idea for you: Instead of separating ‘yours’ and ‘mine’, why don’t we separate ‘Business’ and ‘Home’? That is better accounting anyway for tax purposes and for just generally keeping up with the business itself. I would suggest at least two checking accounts. One account should be just for the business. Any income from the business would go into this account and any expenses for the business would come out of this account. Any money that is left over is called ‘profit’. You would set aside a fourth of that for taxes, so you can pay your quarterlies. Then whatever is left is what you bring home and put in the personal checking account that you share. That forces you to make the home decisions together and in this case you would be making the business decisions together, too.

You could take it one step farther by having the separate business accounts and then taking the profit from both of those and combining it into your personal account, but that is just adding a step to the already tricky process. You should have your business account and personal account.

It is very important for a married couple to agree on household spending together with a written budget and then to stick to it, because as you agree to that spending, you are agreeing on your dreams, passions, fears and goals. The money that is in your house is ‘our’ money, not mine and yours. You need to decide on spending together so that you know that you both have a vote in the matter. Good question.



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