First, for what it's worth, I'll be giving a class on this subject at the convention in Orlando. I don't have a ton of experience, but I've sold one business, bought another, and am in the process of selling a second one. (hopefully before the convention). I've also relied on the advice of my son, who is not only a CPA, but is also a "mergers and acquisition" specialist. He deals mostly in business worth $5M - $60M, but the basic principles are still the same. Some of the information I'm sharing is what I will present in the class.
As Geoff said, we need more information about this subject. The one thing I've observed about some of the tuners who have retired and/or moved who sold their business is that most of the time the sale price of their businesses was grossly undervalued. One of the things that I hope will be learned from this exchange of information, and from my class this summer, is that we, collectively, put more value on our businesses. I've seen businesses being sold for $3000 - $5000, which, in my opinion, is way to low for a full time piano service business that the tuner developed over 40 or 50 years. (This is for the business itself, of course, not the house or shop). If done right, business should be selling in the $20,000-$60,000 range.
The most important value of a business is not the list of customers. The most important value of a business is the "system". The system, as I said before, is the way the business is organized. How the customers are organized, how they are notified for their next tuning, the method of keeping track of income and expenses, the contact information of the subcontractors. The actual value is based on the total income generated, but the "system" is used as a multiplier of that figure.
As an example, when I bought the business here in Hawaii 13 years ago, I literally got a shoe box full of 3 x 5 cards with the name and address of each customer, the brand of the piano and tuning dates. Although he did pre-schedule customers, it was on a paper calendar, and his wife called the customer the night before. I bought the shoe box for $3K, but my wife and I spent a week typing 1000 names, address, etc in the computer. One thing that slowed us down is that I had to look up the zip code of each customer. If this tuner had kept his customer file in a computer and had a better way of contacting them, I would have paid a lot more.
For those of you who are thinking about retiring, even if it's still 8 or 10 years away, the time to start planning for this event is now. Most business owners are forced to walk away from their years of hard work is because they didn't plan far enough ahead to transfer their business to the next generation.
While I would like everyone to attend my class, I'll be glad to answer any questions anyone has who is getting ready to start the process.
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Willem "Wim" Blees, RPT
Mililani, HI 96789
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Original Message:
Sent: 11-10-2020 22:56
From: Geoff Sykes
Subject: Selling a piano tuning business
Isaac Sadigursky has long preached that selling a business is one thing, but buying one is not a good investment. As many of us know, one of the reasons we keep a given customer, I mean beyond providing good service, is connecting with that person. Building a rapport, or friendship, so that the customer wants YOU to service their piano. Isaac suggests that any given customer who is forced to change tuners because their favorite is retiring is likely going to treat the previous tuners recommendation with hesitation. There is no way for the replacement tuner to provide the same service as the old tuner, and the rapport and friendship does not yet exist. The new tuner may "own" the new customer, but the customer is not invested in that change.
Isaac and I did an experiment about 10 plus years ago. He had a number of customers out near where I live, which even on a good day is a good 45 minute drive for him, and he wanted to cut down on his driving due to LA traffic. He was offering to give me those customers, no charge, but he understood that the customer was under no obligation to respond to any first contact I might attempt. Therefore, to encourage the potential new relationship, the two of us composed a personalized introductory letter, that we both signed and provided both our contact information, and which was mailed out to each customer. (Email was not yet a viable option.) About 200 in total. Most did not respond at all and just kept doing business as usual with Isaac. Of those that did respond, every single one of them said that, to paraphrase, they would pay extra for him to make the trip until he died or could no longer do the job at all. He was unable to give these customers to me because he had developed that rapport and friendship with them, and they wanted to be able to make the decision on a replacement tuner themselves. In the end, after several months of work, I wound up with two new customers out of 200 mailings. Isaac has used this experiment in his conference and convention classes as an example of why it's OK to try and sell a tuning business but it's not a good idea to "buy" one. Especially if the buyer has to relocate in order to take over. The customer has no loyalty to the new owner, and the new owner, if relocating and not an aspiring young tech just starting out, would be basically starting over.
Since then, however, I have made deals with several local tuners that have moved out of the area. The agreement is that they will refer a customer to me and if/when I do the first tuning I am to pay that tuner a small percentage of my tuning fee as a thank you for the new customer. After that all billing is to me. In other words, I am paying for the privilege of getting first crack at making a good first impression on a new customer in the hope they will like me, and my work, enough to hire me again. Those tuners, and I, have decided that this provides the customer with a recommendation from a tuner they trust, and the opportunity to make the choice. It also provides a fair monetary exchange between both tuners for the transfer of "ownership" for any given customer.
OK, I'm through playing devil's advocate, and I apologize for the negative viewpoint. I could very likely be in a minority. So, if there are any techs out there that have purchased a tuning business, and made it work, I think it would be extremely valuable to all of us for you to share your experience. Please. This subject comes up frequently and curious minds want to know.
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Geoff Sykes, RPT
Los Angeles CA
Original Message:
Sent: 11-10-2020 20:24
From: Willem Blees
Subject: Selling a piano tuning business
Peter, you make some good points but there are several that are not correct when it comes to buying/selling a business.
1. Training, This has nothing to do with selling a business. New technicians need training, whether they buy a business or start out trying to make it on their own.
2. Business. Again, that has nothing to do with this subject. There are new techs who have a very good understanding of business, and there are old farts who have struggled all their lives because they don't know how to run a business.
3. Money to buy a new business. There are many different ways a business can be bought or sold. In St. Louis I sold my business to one of my employees who had no money and bad credit. But we worked out a mutual agreement.
4. Staying with the new owner of the business. You're right in that there is no guarantee customers will stay with the new owner of the business, but as I've been telling my customers I'm selling, most of them want a recommendation. When I bought the business of the tuner who died, most of them went with me because the widow recommend me. It's the recommendation that made the difference.
5. Element of risk. What will make a big difference is the "system" in place. The system is the computer program, the advertising, the long tern relationships with customers, the vendors and subcontractors that the seller has. Basically the support system.
6. That's one point you make that is true. I thought a lot of tuners looking to buy a business would jump at a chance to work in paradise. That is probably why Brian had such a hard time finding someone. Nova Scotia is not exactly a mecca for tourist or retirees.
7. Yes, we are tight with our money. But we will pay for something it's worth it.
8. Part of the agreement of selling a business is the "non-compete" clause. The seller has to agree not to compete with the new owner for a certain period of time, and in the same general area. In my case, we're moving 8000 miles away, for good.
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Willem "Wim" Blees, RPT
Mililani, HI 96789
Original Message:
Sent: 11-10-2020 15:32
From: Peter Grey
Subject: Selling a piano tuning business
There are several problems with selling this type of business:
1) The training...most younger people do not want (or are incapable of) to put forth the time and effort to learn the skills needed for success in this business. They generally want to train quickly and start making serious money quickly.
2) Most piano technicians (not all, but a high %) do not treat the business AS a business, and therefore have little or no money in the bank so as to be able to buy an existing business.
3) A newbie fresh out of PT school, may have some skills, but definitely has no money to buy an existing business.
4) Even if one can/does buy an existing business there is NO guarantee that it will last since the clientele have no requirement to stay with the new person. They have to LIKE the new person. Element of risk.
5) Very often our type of business is reliant on our relationships with the clients (related to 4 above). Unless the seller makes a concerted and effective effort to support the new attending tech, things can fall apart quickly. Again element of risk.
6) A buyer has to have a strong reason to move to the area where the business is being sold. This requires more capital (which techs tend not to have at their disposal).
7) Piano technicians in general (NOT ALL THOUGH) tend to be pretty "cheap", and not inclined to pay for something if they think they can devise a way to get it for little or nothing.
8) It is not uncommon for a selling tech to have difficulty "letting go". If they can't let it go (and they are not dead yet) things can deteriorate quickly.
These are just some observations, though they are also made from experience. These are just some reasons why it is difficult (but not impossible) to sell our type of business.
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Peter Grey
Stratham NH
603-686-2395
pianodoctor57@gmail.com
Original Message:
Sent: 11-10-2020 10:17
From: Loren Kelley
Subject: Selling a piano tuning business
Wow, that is stunning. Does this mean that piano businesses might end up
being something like those beautiful old pianos? The owners think they
are precious but they actually have no real value in dollars. Of course, I
know my business has real value - I???m making a living after all. But a
thing is only worth what someone is willing to pay for it.
So thank you Brian for your story. Perhaps I won???t have the same
difficulty in 5 or 10 years when I try to sell my own business, but the
fact is I have had several apprentices over the years and none of them
have stuck with it. As of now I will plan to do more of a sales job - tell
any young person Who might be interested that it???s a great career for the
right person and it pays well. I love the flexibility, my customers are
very pleasant people, and I get to do what I???m good at. Surely that would
appeal to some young person! But it may take years to find one and to
train him or her.
Original Message:
Sent: 11/9/2020 8:35:00 AM
From: Brian Johnston
Subject: Selling a piano tuning business
Hello esteemed colleagues,
I retired just a few days ago after a 38 year career in the business. Originally I thought I would be able to sell my business to a younger person, but it took almost two years to find someone that would assume my client base for free..There is a dearth of qualified technicians in Canada and the sole source of trainees (Univ. of Western Ontario) has dropped the program. My successor is a graduate of that program from a few years ago. I have been happy to give him my customer files and personally call or text my better clients to introduce.him. I would have hated to leave my loyal piano owners without someone to care for their instruments.
I want to thank the pianotech community for all the interesting and informative discussions over the years. A special tip of the hat to Susan Kline. Your approach to the business and life in general has been inspiring. A number of your suggestions found their way into my bag of tricks.
Farewell,
Brian Johnston
Johnston Piano Services
Nova Scotia, Canada.