Buying out a Competitor?

[Trip Moses]

A local competitor that is similar in size and gross income has offered to sell their website, phone number, repeat customer list. Residential and Commercial repeat customers.
Company that is wanting to sell is moving family three States away and are taking equipment with them.
My concern is not with customer retention or handling volume. My question how is buying what’s mentioned above a deductible exspense?

 

[hogjowl]

Do a Google search
Type “CPA” into the blank space

 

[Trip Moses]

Do a Google search
Type “CPA” into the blank space

Thanks. I have one. I wanted to do some research before I called her. Idiot.

 

[Jimmy L]

A customer list is worthless. You will only retain a fraction of his clients.

 

[Trip Moses]

A customer list is worthless. You will only retain a fraction of his clients.

Hard yes. But not what I was asking about.

 

[Cleanworks]

A customer list is worthless. You will only retain a fraction of his clients.

If you only pay a fraction of what it's worth, it's still worthwhile.

 

[FredC]

Thanks. I have one. I wanted to do some research before I called her. Idiot.

LMGTFY - Let Me Google That For You

For all those people who find it more convenient to bother you with their question rather than to Google it for themselves.

bfy.tw

 

[Mikey P]

Who knew that cute little girl would grow up to be a cyberstalker..

 

[hogjowl]

There’s no water on the raft
Bring your own

 

[BIG WOOD]

How many of those customers are active customers?

 

[Lee Stockwell]

A phone book is a customer list.

 

[BIG WOOD]

A phone book is a customer list.

Active customer list. Not a phone book.

 

[Trip Moses]

I’m over it. Never mind.

 

[J Scott W]

It is a deductible expense. Most often would be considered a capital investment and written off over several years. But, the details depend upon the amount you pay, how your business is set-up and other factors.

 

[hogjowl]

We’ve killed innumerable dreams here.

 

[Trip Moses]

I’m just gonna drink some encap juice mixed with deodorizer and shoot filmy crystals out of my front hole. Thanks.

 

[Cleanworks]

I’m just gonna drink some encap juice mixed with deodorizer and shoot filmy crystals out of my front hole. Thanks.

careful, might come out the back one sneakily.

 

[Lee Stockwell]

The list, phone number, and website have close to NO value in most cases.

 

[Lee Stockwell]

Just spend a bit more on firming up YOUR reputation and business operations with the money you would have spent.

 

[ruff]

Not that the original poster asked but I totally disagree with the chorus.

If the selling business:

1. Charges similar prices.
2. Has a good relationship with their clients.
3. Is willing to send a letter of introduction about the transfer and a heartfelt recommendation.
4. No sneaky monkey business on their side.
5. Price is right.

It could be a very good deal.

 

[clean image]

i bought out a competitor ( partial) about 4 years ago

my accountant deducted the entire transaction, if i rememer correctley

And i disagree with Lee, THe website still pulls enough to warrent keeping the dedicated line and website expenses after 4 years

the sellers choices are limited...

 

[Cleanworks]

The list, phone number, and website have close to NO value in most cases.

Heartily disagree Lee. I bought my present company from a husband and wife team in 1990. I was able to keep the majority of their customers and still have a lot of them to this day. No website back then, just the phone number, yellow pages advertising, and a rolodex. Gave me a better start than starting on my own with nothing. Not all are the same. Some are worth their weight in gold.

 

[steve_64]

Wait till his number comes available and get that if you want but I'd do like Lee said.

 

[Andy]

Nothing in life is free! What the business would be worth to you as a buyer would depend on how much you would have to spend in marketing to generate as much business as you would get from buying an established business. If the business has a good reputation and yours is good as well it might be worth the investment. If their reputation is bad you would have a lot to overcome.

 

[Mark Saiger]

I watched it happen here locally.

I sold one of my cleaning businesses years back... Sold to a former employee of our family. He worked for us while in high school in my parents town. He moved here to my town and bought my cleaning business mainly for equipment. I was crazy busy with my band directing teaching and when asked if I would sell it....I did.

The new guy didn't really develop the business or reinvest so he didn't have much to sell really when he left back for the Red River Valley again years later with his young family (back to the old home by my parents).

He sold his business with junk equipment by now, a phone number and card file to another of our competitors (by this time I was back in business with newer equipment and such and starting to dominate)

The company that bought his junk and card file.... Pretty much wasted money, because most of the client base came over to me.... And it cost me nothing to really get them as customers except doing good work, clean looking vehicles and a charming attitude and smile.

 

[hogjowl]

You’re a murderer

 

[FredC]

So..............can anybody answer his actual question?

 

[hogjowl]

 

[steve_64]

So..............can anybody answer his actual question?

Why reward the competitor on his way out. If there some equipment maybe but business should pick up just by his leaving if you do a little marketing. Pick the number up when it comes available. Work on your own business.

 

[FredC]

Why reward the competitor on his way out. If there some equipment maybe but business should pick up just by his leaving if you do a little marketing. Pick the number up when it comes available. Work on your own business.

the question is about taxes Steve........and may hep someone here in the future


I think he gets that some of you view buying customer list as bad ........and that getting first dibs on commercial accounts that will not have a cleaner, a possibly well ranking site, and that guys repeats for $6.50 would be stupid