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fw: gretchen purchasing supply co.

updated wed 19 jun 02


Joanna Jorgensen on tue 18 jun 02

-----Original Message-----
From: magentasmom []
Sent: Tuesday, June 18, 2002 9:15 AM
Subject: RE: Gretchen purchasing supply co.

For the record, my day job is in the telecom hardware field, so if my
take on this does somehow not translate to pottery supply my
apologies, but business is business.
That said, there is a definate value on a customer base and a
distributorship, that is what our business is based upon. A sole
distributorship especially because with that you gain certain rights,
to co-op money for advertizing, the use of their name, and any
residuals from the ditributors advertizing they may do, esp. to trade
mags. and such. Many other benefits go along to numerous to mention.
As far as a customer base it is just that, unless you really mess up,
it is a base upon which you can grow your company, instead of having
to start from scratch.
If we were to sell our current company, or when we sold our previous
company the major assets of the companies were customer base,
distributorship, and inventory. When someone sells a company such as
the type that sells a specialty product these items must have a fair
value associated with them.

So to you Gretchen, to find the value of the customer base, take the
amount of sales associated with the base(not all sales are repeat
therefor cannot be associated with the base) and multiply that by the
next 5 or 10 years, the length of time differs for each industry, and
you need to establish how long the customers will generally remain
with your company, how long it will take to establish yourself and how
your business plan for the company maps out the next few years.
With the distributorship its value is in its exclusivity, if their is
a current contract for you to be the sole distrib. in a given area
(usually stated in miles) it has value, if its a sole distrib. by
luck or chance and nothing binds you to sell thier product or them
from opening up next door(or another vendor) it isn't worth anything.

So I've rambled enough, good luck to you gretchen, do your homework
and you'll find every statistic you need to come up with a value.