Need opinions badly!!!!

[LauraAndrews]

I am fairly new to candle making, LOVE THIS!, have done this as a hobby only, but definitely want to move towards doing this as a business or incorporating candles into my gift basket business.

I recently found a local candlemaker who is selling her established candle business, 5 years old. She has custom designed labels for each scent, over 60 of them, which are just gorgeous, and matching logo and website which is ranked very well. Her website has been up for about a year and it had 5,000 dollars in sales last year.

It also includes all her candlemaking supplies - Presto pots, about 75 pounds of wax, wicks, containers, all fragrances, instructions how to do each candle she has extensively tested. It also includes inventory of quite a few candles too.

It has a very unique image that I think really sets it apart, which in and of itself I think is worth a lot, because candles are a competitive business (just like gift baskets), especially online.

Considering all the trial and error I would have to go through to start something like this, the design work, the website, all the testing, everything....it is quite overwhelming.

She is asking about 7,000 for her business. Would you consider this a good deal?

[LauraAndrews]

Oh how nice, I see that I am a wax drip!

Laura

[Lisa]

I am not sure if it is a good deal, as i am still learning but if everything looks nice, and she has good products, wax, fragrances etc i would go for it.

[lindsaycb]

$7,000 makes me choke a bit. Unless she uses a specially designed wax just for her candles, you're really not getting that much inventory to even make a dent in the $7k.

I would think if you studied labels and what you like & don't like, you could easily outsource it to another chandler here on the board to create a design all yours.

What have her sales been over the past three years...or five years? Does she have wholesale clients too? Or simply web sales?

Have you burned one of her candles?

Just a few questions.

[RobinInOR]

Not sure. Does her current customer list come with the deal? Will her current customers know of the owner change, and will that affect sales? Is she opening her books to you so you can verify her sales? You get the business name, right (?) and ownership of the website would be transferred to you? How does she take credit cards, will you need to spend any extra to get that kind of stuff set up?

These would be the type of questions whirling around in my head

[LauraAndrews]

She has made approximately 6,000 a year but has only spent a few hours a week on it. About 2,500 was website sales for the first year (which I think is great). She will give me all records of earnings and customer base which includes 5 wholesale accounts. Right now the shopping cart is disabled but for my gift basket site I use PayPal and am happy with that for now.

I have not burned any of her candles; they are on their way to me shortly for me to try out. Everything would depend on that! If they are awesome as they are supposed to be, then great...but if not, then just forget it.

For wax it is her own blend for the jars, soy for another line (not such which soy), and proprietary blend for bakery candles. Logo would be owned by me and also website.

I have been looking for a more unique identity and tighter focus for my gift basket website, and this particular theme could go along with that just perfectly. So the awesome logo and labels, well designed site ranked #1 in Google for certain terms, I think would be a great addition. But it is a lot of money...so I'm not completely sure what to think...

Maybe a more specific question I might ask is, How much money and time do you think someone would have to spend to come up with a line of candles of 3 different types with 60+ scents before they would be ready to sell them?

I know a Google ranking of #1 for any keyword, in and of itself is hundreds and hundreds and hundreds of hours of work, have been working on that for my gift basket site...it's still not in Google, but it is #1 at MSN for romantic gift baskets. Not easy to get there!

Thanks for all the thoughts...please send more....

Laura

[LynnS]

Yes for the biggest part BURN the candles.I have seen people make lots of money and the candles are not good.I had one person tell me her co-worker had a website and also other business she wasn't able to keep up.I saw a place burning her candles and you couldn't see the inside of the jar for the soot.

I also have people say that they paid big bucks for candle and they cannot smell it.Some pay a reasonable amount for a candle but it won't burn. Some buy candles and the wick drowns out and then the candle also may not last long.Those are complaints I hear from people and when they buy mine they cannot believe the price for the candles that finally has what they are looking for.We candlemakers who make our own don't want our name on it if it isn't a good quality candle.

LynnS

[sharyl55]

Even though she is giving you her recipes are you sure you can duplicate her products? It isn't as easy as it sounds.

[agoodsaid]

I wonder whether she would be willing to let you be in her studio with her for a weekend or something.

An established client base (how many are there?) and website are worth a lot if you can continue to deliver the same product.

You DO want to know how the traffic that her site has gets there ... if it's not all free search engine traffic, you'll want to be clear on that too.

How much of her business is dependant upon 'her' (forum posts and such), ppc ads (will she train you in this area) and how much is pure search engine ecommerce?

The wholesale accounts are promising ... does she have pending orders? Selling to a store once does not mean it happens again ... and here too, will they be cautious with a new manufacturer? It would be more 'real' if she were to sell to you with pending orders.

I can feel your excitement! And I'm sure that you can make that amount back if you put your mind to it. There are a lot of parts to weigh, eh?

The real value here is in the website and customer list ... imho. The production part and whatever materials that come with it are just details ... one maybe a hump to get over and the other a happy bonus.

hth,

Andrea

[cindym]

Seek advise from a lawyer,never pay full price, I think I have seen this advertised on E-bay. Do not make a deal with her that isn't legal and binding.

[Grumpy Girl]

Seek advise from a lawyer,never pay full price, I think I have seen this advertised on E-bay. Do not make a deal with her that isn't legal and binding.

Yeah Cindy, I think I've seen the same listing on Ebay that you're talking about. Didn't they want somewhere around $3-5k just for the website?

[sockmonkey]

I don't know if that is a good deal or not, but I would ask these questions--

1) Why is she selling the business?

2) What will keep her from starting another company with a new name, but selling the same candles, possibly to the same customers?

3) How much repeat business does she have?

Don't be tempted into buying her business just because you are attracted to the look of the labels, etc. For less than $7000 you can take some candle making classes if you want, AND have labels designed and printed. So, it sounds like what you're really paying for is her customer base and her "proprietary" blend of wax.

I'm not saying don't do it. I would hold off judgement until after some of the above questions are answered favorably, and you've tested her candles and LOVED them. If you aren't absolutely 100% THRILLED with the quality of the candles then I would say it's a no-go. You need to feel pride in the product you will be selling. Without it it can't be successful.

[BruceCarvesWax]

The best web page in the world might get a customer to buy once, but if the products are not great thats all you are going to get. I have never had a web page nor ever want one, but to me the sales figures are not impressive for a 5 year business. Test her products, you might be buying into a gold mine... or you might just get the shaft. Bruce

[The_Dallas_Texas_Dean]

In the grand scheme of things, with all considered, I do not believe that the asking price is out of line. I would urge you when reviewing her books to try and discern how much REPEAT business she has.( Including the 1-3 item purchases).

If you decide to go ahead with the purchase I would definitely include a "no competition" clause to the Purchase Agreement.

Make sure to call the BBB and check with her Insurance companies to see if there have been any claims. ( with her permission, of course... I think that she will have to help you with this in order to get the information.)

Any outstanding debt?

Is she a member of any business organizations? If so, how is her relationship with the other members. ( ie. the Chamber of Commerce, ewomans network etc. )

I am just trying to think of everything for you to consider. Honestly, if she has a well developed product and the things mentioned are all in check, I think that you have saved yourself a lot of time. ( if this is something that you would have spent the time to do on your own.) It is a lengthy process to do the things she has done and is offering.

Good luck to you. Keep us posted!

Michael

[Casey]

Here's my two cents...I saw the ad, and the site is outstanding, I like it alot. $7000 probably seems like a song from the seller's point of view, there is a huge amount of sweat equity there, and a lot of really creative original design work. The amount of supplies offered with the biz does not seem like alot to me. The intellectual property is valueable, but also intangible, and could easily become a huge source of drama that could turn the whole thing sour really fast. Or not, the transfer of knowledge could go smoothly, if you are both excellent communicators. The more previous experience that you already have candlemaking the better. It can still be just as overwhelming as doing it yourself, and possibly not as rewarding.

Having said all that, if it were me, I would not do it. I make candles for the love of it. If someone had just handed me a finished formula book and said, now churn these babies out, slap on these lables, and sell 'em! I would have lost interest. It seems it'd make it just drudgery, I wouldn't be able to stay intellectually and creatively engaged. $7000 bucks down the drain cuz now I hate what I'm doing and I'm unhappy.

Teaching myself and mastering this craft has helped me to grow, taught me discipline, determination and perserverance, as korny as that sounds . Of course, there have been days I mighta killed for a finished formula book! Discovering my own fragrance blends, testing and developing, designing and re-designing my look and inventing an identity for my little candle business has been time consuming, laborious and not cheap. But having done it all myself is what makes the venture completely mine, totally unique, and most of all, rewarding. Just food for thought.

[elle110]

There is a candle biz listed on ebay, is it the same one? The one on ebay says the canles are NOT made by them, that only the website and contacts are for sale. Interesting, it is also $7000. The candles on their site do look nice but they are not handmade.

I don't know what I would do. It sounds like a very intricate deal, which any business deal is. I say no matter what you do, cover you a$$, get an attorney and make sure she is not your competition in a year if you do go for it

Elle

[LauraAndrews]

That is a different one. This one can be found at http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=7578628850&rd=1&sspagename=STRK%3AMEWA%3AIT&rd=1.

Laura

[Bev_S]

Hi everyone, someone pointed me to this thread and hopefully I can clear up a few things regarding the sale of my business. I had hoped when I put it up on ebay that I had made it clear that much of the price of the sale was for the creative/intellectual property of my business. As I had indicated to several people who inquired about the business, much of the time I had (and I had very little as I have 5 children), was spent doing the design/creative work for the business and very little actual selling or marketing. I do have a faithful customer base, and have acquired a few wholesale accounts in the past year since I put up the website.

But I was hoping that people would recognize the value of custom designed creative work and understand the value of what they were obtaining.

For instance:

If you check around and compare prices on custom designed website building, you will find quite a few rates, but for the most part you would be charged anywhere from $50-$75/hr. It is much harder to obtain a flat rate fee for custom design. This is not a pre-made template, it is hand coded HTML, at least 200 hours of design went into this website. I purchased and designed all of the graphical artwork for the site.

This is what what website estimates for their own design work:

Web Page Design Services

...services that fall into this category include web page formmating, HTML coding, and other basic HTML web page design work. This does not include Graphic Design or Program services as described below.

$50

Graphics and Web Page Design Services

...services that fall into this category include designing logos, misc. graphics, layouts, buttons, etc. Solutions billed at this rate do not include any form of CGI programming, Implementation of ASP, Miva Empressa, XML, or Database Management, Database Design, or normalization of databases.

$90

For instance, if a graphic designer is needed for a total of 20 hours, and a web page designer is needed for a total of 300 hours:

Staff Category

# of Hours

Hourly Rate

Total Billed

Graphics Designer

20

$90.00

$1,800.00

Web Designer

300

$50.00

$15,000.00

This is obviously quite high, but I wanted to point out that creative work is billed quite highly. I am not "professional" in that I am doing this for a living, but I do have a background in desktop publishing and design. So, for the following examples I will bill myself on the low end here at $25/hr.

My "creative work" encompasses:

The website -- if billed at even $25/hr (which is on the low end) for 200 hours the value would be $5000. 200 hours is actually a very conservative number. This also encompasses the photography, copy writing, etc. But let's set the value of this lower, at about $3000.

The graphics on the website -- if billed at $25/hr for 20 hours, the value would be $500.

Search Engine Optimization -- last year the site had a ranking in the hundred thousands somewhere. In one year, due to extensive Search Engine Optimization for my key words "bakery candles" and "pie candles", it now ranks #1 in Google for Bakery Candles and #4 for Pie Candles (it has actually gone up since my ebay listing). This is no accident, this is due to many hours of special html coding, and link maintence and other search engine optimization procedures. Normally you could expect to pay anywhere from $600-$1000 for this type of optimization. And that is many times a one time fee without any further maintence. I have been optimizing my site for the past year. We will set the value on this at the low end -- $600.

The custom designed labels -- now here is where I think many do not understand the value. These are not the same label with a new scent name printed on each one. These are custom designed for each scent, about 50 labels total. If I billed myself at $25/hr (again, very low) at approximately 1 hour per label (some were more, some were less) it would be a value of $1250.

Add to all of this creative work:

Approximately $1500 in supplies/inventory

My customer base/wholesale accounts (and also email addresses for every wholesale inquiry I have received for follow up), I'm not sure how to determine what these are worth.

My formulas and techniques -- how many times have I read on these message boards of candlemakers so offended by other asking for their product techniques. In response they say, "Only if you pay me $5000" or something to that effect. I will admit, most of the uniqueness of my jar candles are in the packaging. They burn great, and I have no problems with them, I have fantastic scent through, etc. But what sets them apart is the labeling. The bakery candles are another story. I can't tell you how many people have inquired about my pie making techniques and other methods of making these candles. All you have to do is look around the internet and compare the photos to my pies to see that they are different. They are handcrafted, not just poured into a mold. Yes, it's more work, but there are many people out there who appreciate and value handcrafted work and do not underestimate it's worth. I am offering my techniques, which were developed and perfected over the past 6 years on how to make some of the prettiest and realistic handcrafted bakery candles on the market. I'm not sure what to value this at, but to be conservative, let's say $1000. These are my best sellers, and apart from my design/creative work, one of the most valuable things I have to offer.

The total value of this very conservative estimate comes to $7850. Remember though, I have billed myself quite low. Also, this is without the customer/wholesale account list.

I know much of what I am selling is not tangible, but I do know it is worth a lot. Anyone who has any artistic or creative experience should understand that. It's not about numbers, financials, this or that. I'm not selling a get rich quick base of customers. I'm selling an extremely creative and professional design package that happens to come with some inventory and customers.

There is value here, I just think it will take someone who can recognize it and use it to their profit and success.

My reasons for selling are basically this: I don't really enjoy candlemaking anymore. I realized that I put more time into designing my product, that I never made the effort to market or sell. I came to the decision that what I created had a huge profit potential, but it wasn't going to be me to take it there. I just don't have the type of personality to do that. I love to create and design, and I am going back to school. I am also considering doing freelance graphic design on the side, but I want to sell the business first to see where that takes me.

I hope I've cleared up some things, I think if I re-list the business I might have to describe what I'm selling a bit differently.

Thanks for listening and feel free to PM me with any questions.

Beverly Shideler

The Glorylight Candle Co.

http://www.glorylightcandleco.com

[sockmonkey]

It's obvious from the link someone supplied that the graphics/design are really what is for sale. The supplies being sold seem scant for someone in business raises a red flag to me.

[LauraAndrews]

Well if you read the description I think she is completely honest and up front about all that. She basically poured all her heart and soul into getting her business started, now it will be time for someone to pick it up where she is leaving off.

Personally, I think having a unique image, a well ranked site, gorgeous graphics and custom labels, very good candles, is worth more than just a truckload of supplies and then having to come up with all those things on your own, but I can see from all the different answers there are a lot of different perspectives to it.

But I have appreciated all the helpful advice...a lot to think about!!!

Laura

[Tess]

IMO if she is such a "well established" business, and is telling you she has lots of business, 6,000 is nothing, She ought to be making alot more than that. My first year of business I made over 10,000 dollars (not profit wise). I did not spend everyday of the week on it either. I don't think her business is as "thriving" as she has made it out to be. JMO

[Bev_S]

Um, did anyone bother to read my post? I just explained why I'm selling the business and what I'm selling and I am being made out to be some kind of scammer. Please read the post I made in this very thread, it wasn't that long ago.

[cindym]

I don't think that anyone thinks you are a scammer, we all have our own opinions, and a lot of us have successful businesses that we have built from the ground up also. For me personally supplies would be a main consideration, in purchasing a business for 7000 dollars, in the end we spend most of our money on supplies to supply our customers, it is just a different perspective for those of us who already run a business. Your website is beautiful and your design work is beautiful also, but a solid customer base is what drives a business, website sales are not going to keep a business going, a customer base will. I think that is the only concern for anyone buying any kind of business. Hopefully we can keep a level head here as this is an opportunity to discuss the pros and cons.

[Tess]

Um, did anyone bother to read my post? I just explained why I'm selling the business and what I'm selling and I am being made out to be some kind of scammer. Please read the post I made in this very thread, it wasn't that long ago.

Who said you were a scammer? Seems you are quite defensive about some of the "opinions" on here.

Laura, this is exactly the kind of thing to watch out for. (IMO)

[Bev_S]

I understand, and you are right. I guess I need to present the sale a bit differently in the future. As it stands, I guess I am selling a "design package" and not an actual business, but it also includes much of the business aspect as well such as formulas, techniques, inventory, and customer base (though not huge, sorry to say). I guess it's more of a communication thing.

But what I do know is this: I have only put minimal part-time effort into my sales and marketing and have consistently earned decent sales for such a minimal effort. The website alone had $5000 in sales and it has only been up one year. I think that is a fairly good return for such a fledgling website. And now that my Google rankings are high, it can only get better.

I was hoping that people would understand that the business has a huge potential, especially if someone is working full time at it. Or at least more than I was.

Like I said, though, I think it's more of a communication problem and I will have to make adjustments to the listing.

Thanks for the valuable input everyone.

Bev