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Selling parts of my business
Thread poster: Michael Wetzel

Michael Wetzel  Identity Verified
Germany
Local time: 07:35
German to English
May 30

I'm interested in restructuring my business and beginning to work exclusively on larger and longer-term projects. I would like to sell my domain names (if necessary, I want to be the one approaching potential clients and not the other way around): arttranslator.com and kunstuebersetzer.de and find a way to earn some money by sending existing clients that don't fit into my new model to a new freelancer or specialized translator who would suit their needs.

Step one would presumably be to approach potential buyers with very general information about my clients, prices, etc., and to see if there is any interest and then approach my clients to see if they are interested in giving me permission to share their data with specific potential buyers.

I think that my rates are at a level where they would be useful to an outsourcer specialized in my field and I certainly think that more or less all freelancers would be happy with them. The German website certainly brings in a substantial number of requests for offers, but I don't have any way to quantify how much, because I've never worried about statistics or asking potential clients exactly how they find me. I don't think the English website brings in any traffic, because I've barely touched it since launching it around 2010 and never put any significant effort into its SEO. (I decided to concentrate on the markets in Germany, Austria and Switzerland and never had the time or inclination to work on that part of the website.)

My clients would be worthless to generalist agencies and freelancers, because they wouldn't have the resources to meet my clients' expectations. However, if a new translator is willing to pay a lump sum for the information (= they put their money where their mouth is) or I am willing to be paid according to a commission (= I put my money where my mouth is), and I can produce a convincing argument why the new translator is likely to succeed, then I think there is a good chance for all three parties involved to have the same interests and to be able to expect a positive outcome.

The more common version of this issue would be the question of what to do when entering retirement, so it would be fine with me if the discussion veers off in that diriection.

What am I forgetting and who can share relevant experiences?

I suppose I'm expecting a barrage of abuse for my mercenary commercialism, but I still think this is something that people should be thinking about.

I found two older, more or less relevant discussions:
http://www.proz.com/forum/business_issues/285007-selling_your_agency.html
and
http://www.proz.com/forum/business_issues/285260-retiring.html


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Dan Lucas  Identity Verified
United Kingdom
Local time: 06:35
Member (2014)
Japanese to English
Motivation May 30

Michael, I don't want to distract attention from your interesting post, but my eye was caught by this part of the text:

(if necessary, I want to be the one approaching potential clients and not the other way around)

I think the consensus would usually be that it is nice to have potential clients approach oneself, rather than the other way round. Presumably, being a rational person, you wrote the above sentence because you have had experiences that indicate that the opposite is true, is that right...?

Regards,
Dan


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Michael Joseph Wdowiak Beijer  Identity Verified
United Kingdom
Local time: 06:35
Member (2009)
Dutch to English
+ ...
~ May 30

Dan Lucas wrote:

Michael, I don't want to distract attention from your interesting post, but my eye was caught by this part of the text:

(if necessary, I want to be the one approaching potential clients and not the other way around)

I think the consensus would usually be that it is nice to have potential clients approach oneself, rather than the other way round. Presumably, being a rational person, you wrote the above sentence because you have had experiences that indicate that the opposite is true, is that right...?

Regards,
Dan


I assumed he meant he wants to pick his clients, not the other way around. But there is of course something to be said for both scenarios, and of course, a lot will depend on the type of clients approaching you...

Michael

PS: my personal experience has been as follows (in a dictated nutshell): these days, if I go through the trouble of finding clients myself, I often manage to find very high-paying direct clients. However, if I can't be bothered, or am too busy (which is usually the case, sadly) and just sit back and wait, I am always approached by plenty of people every day, although most of these are average-paying translation agencies, although I do once in a while get approached by higher-paying agencies or even very high paying direct clients. the trick, as I'm sure you both know, is to find a good balance

[Edited at 2017-05-30 10:18 GMT]


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Michael Wetzel  Identity Verified
Germany
Local time: 07:35
German to English
TOPIC STARTER
Motivation May 30

I want to have a couple of deadlines a month, instead of several a week, and I would like to send out maybe an offer or two per week, instead of fairly regularly sending out an offer or two a day.

Having people come to me was a great way to stay busy and raise my prices, but the financial side of my business has been fine for years now (we have two kids, but don't spend much money and my wife also earns a good salary), and I think it's time to concentrate on the private side of my life.

I thought about hiring a part-time project manager and beginning to outsource regularly, in order to be able to regulate my workload and genuinely take time off (no e-mails etc. for whole weeks) and make some money in the process, but it's hard to make those numbers add up to a significant sum and, at least for the short and medium term, that's likely to lead to more work and uncertainty rather than less.

Instead of investing the money in that project, I've decided to use it as a safety ring to venture out into new waters. I'm about to turn 40. This may be a little boring as far as mid-life crises go, but that doesn't bother me.


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Michael Wetzel  Identity Verified
Germany
Local time: 07:35
German to English
TOPIC STARTER
Off agencies' radar May 30

With the exception of the occasional mass-mailing spam offers that come in through ProZ, I basically never hear from agencies. I worked with one earlier this year, but they paid me my standard prices for a (presumably one-off) editing project and that is the only serious contact I've had from an agency for years.

So, I suppose a good imbalance is better than a good balance, but as I wrote, I am tired of the private side of dealing with direct clients in the specific role I had developed as an independent professional. I've worked extremely hard for years and now I've noticed what really looks like a genuine opening for a new role, and I'm going to pursue it.


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Chris S  Identity Verified
United Kingdom
Swedish to English
+ ...
Hmmm... May 30

Are your customers really that undiscerning?

Mine aren't. While my accountant cannot be convinced my business has zero goodwill, I know I'm right. Without me, it is nothing.

Which is not good in terms of retirement planning.

On the other hand, I'd be worried if any of my customers could actually be sold to another translator. I like to think they come to me because I'm special.


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Michael Wetzel  Identity Verified
Germany
Local time: 07:35
German to English
TOPIC STARTER
I like to think they come to me because I'm special, May 30

but I'm not all that special.

There are genuinely dozens of translators out there with art history degrees translating from German into English. A fair number of them can be bothered to answer e-mails within a few hours and answer the phone (or call back soon) during regular business hours, can speak and write German well (or at least well enough), are willing to put in extra hours when a lot of work all comes in at once and, last but not least, can consistently translate very well.

There are also some specialized agencies around and my experience suggests that you can consistently find consistently good translators at €0.12 per word. That leaves a budget for editing plus some profit. But, as I said, it's not a very interesting proposition financially unless the subcontractors are only there to pick up the slack when there is simply too much work to do and to enable you to always have more than enough work to avoid down time.


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Chris S  Identity Verified
United Kingdom
Swedish to English
+ ...
Ah... May 30

Things are a bit different in a minor language. Sounds to me like you're in an enviable position if you can find the right person, which is the challenge. And quite a challenge. Maybe outsource to them first so both sides can check compatability?

When my various mid-life crises have struck, I've carried on translating 3-4 days while pursuing a sideline part-time. Although that has meant that these sideline have suffered and never properly taken off, it has at least enabled me to test the waters and find they weren't as rewarding as I'd anticipated, without burning any bridges... Eggs and baskets and all that.

Good luck!


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The Misha
Local time: 01:35
Russian to English
+ ...
Nothing wrong with "mercenary commercialism" May 30

but the way I see it, you have precious little to sell. I mean, really, what ARE you selling?
To be sure, it could be the website traffic, if you think that's substantial and could bring in a sufficient revenue stream, but - "The German website certainly brings in a substantial number of requests for offers, but I don't have any way to quantify how much, because I've never worried about statistics or asking potential clients exactly how they find me." So what exactly is the valuation of that potential asset supposed to be based on? Your scout's word?

But that's not the largest of your problems here, I am afraid. Whether we like it or not, the nature of the service we provide is hopelessly personal--at least in the higher-paying specialized segments of the market it is. That's what my experience has always been. Aside from the issue of how your clients will interpret an attempt on your part, as such, to sell their business to an outside third party, which in itself is a big question mark (hint: they may get really pissed and send you packing), you cannot in good faith guarantee that these clients will "hit it off" with the new provider and decide to use his or her services in the future. Nor can you guarantee that your buyer will indeed provide the required level of service--not unless you've known that party professionally for a long enough period of time. So, basically, all you are selling here is an offer to introduce your buyer to your clientele. How much would that be worth? As a potential buyer, I have no idea, so you'd have to reveal enough details to make the offer attractive enough--and hello, NDAs! See where I am going with that? The devil is, indeed, in the details.

If, on the other hand, your business is as "mechanistic" as you describe ("A fair number of them can be bothered to answer e-mails within a few hours and answer the phone (or call back soon) during regular business hours, can speak and write German well (or at least well enough), are willing to put in extra hours when a lot of work all comes in at once and, last but not least, can consistently translate very well"), and you are easily replaceable, then the inconvenient question arises again, what is it that you are selling? All the potential buyer needs to do is schmooze around a bit and cozy up to those coveted clients of yours himself. He'd be just about as likely to get their business as through paid introduction by you--the easily replaceable provider.

Aside from a few atypical flukes here and there, there is hardly any easily sellable equity in a one-man service operation. What you and your regular clients have is a business "marriage" of sorts (assuming you do have it, that is; otherwise you run into that non sequitur again). Unfortunately, that's the price we pay for being special:)


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Angela Rimmer  Identity Verified
United Kingdom
Local time: 06:35
Member (2014)
German to English
+ ...
Just wondering... May 30

Michael,

You say you are wanting to sell your domains, so essentially sell the "face" of your business, and presumably rebrand yourself to seek new clients that fit your desired business model? But it sounds like you are also trying to sell your clients. Did I understand that correctly?

How exactly would you plan on selling this idea to your clients (the ones you want to offload)? And what sort of transition plan do you have in mind? Your clients may not be as discerning as Chris' appear to be, but still... it's a bit risky to pay for client access with no guarantees that once you pay the agreed sell price, the clients don't just disappear off to another supplier that they themselves have chosen rather than being thrust onto a new supplier they don't know.


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RobinB  Identity Verified
Germany
Local time: 07:35
German to English
Check tax law position May 30

Michael,

If you are a freelance professional (Freiberufler), I suggest you seek advice from a tax adviser (Steuerberater) before selling these domain names - just to be on the safe side. The reason is that many activities are prohibited for Freiberufler in Germany because those activities are "trade" (gewerblich). You can't publish any books or dictionaries, for example, or organise training events, and there's a whole load of things you aren't allowed to sell. It may well be that the tax adviser will tell you that it shouldn't be a problem, but the tax consequences if it is a banned activity are pretty unpleasant.

Otherwise, I think it's a perfectly legitimate business proposition.

Robin


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Michael Wetzel  Identity Verified
Germany
Local time: 07:35
German to English
TOPIC STARTER
more answers May 30

Outsourcing - or actually referalls - as a way to test the waters was a thought that had already crossed my mind. Pursuing that plan today, I can say that it was very difficult to find anyone who had time for a fairly limited project with a fairly generous deadline (I got one offer and four people simply waved me off).

As far as eggs and baskets and burning bridges goes that is probably a good argument for holding on to my domain names (while taking the websites more or less offline) and simply referring clients to other freelancers instead of selling that information: That means I can always go back if things don't work out. If the contacts aren't very marketable anyway, that makes the decision very easy. And to be honest, maybe the sums involved aren't really significant enough to be worth the hassle anyway.

For me, this is a way to translate four days a week or three weeks a month and be able to free up some time for other (für Robin: Freiberufler- und KSK-konforme) projects as well: That is certainly part of the idea.

What I am looking to do is to keep a number of my clients, expand the amount of work I do for some of them and pursue the other clients and the lifestyle I want in a more deliberate and focused way. It's not really about rebranding myself as much as simply being very selective about who I "brand" myself to.

I want to sell this idea to my current clients by selling their data to someone who has the same qualifications as me and outwardly strongly resembles me. In addition, the buyer will either be prepared to bet his or her money on being able to satisfy my clients or I will be paid based solely on a commission for the work they receive (= I only make money if the relationship works out). The second option seems like the most likely to convince everyone involved to trust everyone else involved.

Robin:
I didn't think about the tax issue you raised, I would think this is simply selling a business asset (I am not buying up and reselling domain names), but no one at the tax office is likely to be very interested in my thoughts, so it's a valid point. I'm also more worried about my status with the KSK than with the Gewerbeamt, so I would also need to contact them to find out what this would mean.


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Michael Wetzel  Identity Verified
Germany
Local time: 07:35
German to English
TOPIC STARTER
Response to Misha May 31

For some reason your post didn't show up until much later ...

I think the way to deal with the fundamental problem of how to set a value on what I want to sell is to base payment on a commission. That requires me to trust the potential buyer to not think "What the hell? I've got nothing to lose," and to honestly report their earnings, but it's pretty hard to do business without placing a lot of faith in our partners once we have checked them out with due diligence.

I also understand that my relationship with my clients is based on a very specific relationship, but I think that this relationship can be reduced to 5 or 10 key variables (whose relevance may vary from case to case) and that there are a significant number of translators and specialized outsourcers out there who can fulfill all of those variables or compensate a couple deficiencies through strengths I don't have. Even where there are some elements of a more personal relationship with clients I've met or who I talk to on the phone, they are still going to need a new translator, even if they might enjoy working with me.

In that sense, I think the relationship can legitimately be looked at from a "mechanistic" perspective. And if it were that easy to schmooze or that easy to find a good translator with time for new clients and projects, then the world would look very different. Word of mouth is a gigantic factor and if I find someone who makes sense for my clients and can more or less seamlessly take over where I left off, then that is a giant service to the client. I think the same applies in reverse for the right translator.

As far as NDAs go, I work with micro and small businesses and a lot of freelancers: I doubt I've signed any kind of general T&Cs or any separate NDAs with more than a dozen clients. On the other hand, I'm in the EU (and Germany on top of that), so selling any kind of information about anyone without their very explicit prior consent is très verboten. It would also be stupid and dishonest. The idea is that I need to find out if there are potential buyer(s) and then approach my clients with the statement that I am not going to be able to work for them and the question of whether they would like me to find them a new translator, while also making it clear to them that I will be earning money through this transaction.

What is now clearer to me is that I need to draw up a very specific list of what prerequisites I think someone would need to be able to keep my clients happy, because a bad match is no good for anyone.

And to get back to the marriage metaphor: If my wife comes home tonight and tells me that Patrick Bruel has proposed to her and she is going to leave me, I'd be very sad, but on some level I'd also understand her decision (unique and wonderful as I am). Wouldn't it be great if she then told me that she feels bad about the whole thing, so she's put a lot of thought into what makes our relationship great (or at least pretty great, though not Patrick-Bruel-great) and found someone that would make a great match for me?


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Jan Truper
Germany
Local time: 07:35
Member (2016)
English to German
+ ...
I don't understand May 31

Like The Misha (whose post showed up late because he/she/it is not paying Proz member, I assume) I also don't understand what you are trying to sell.
Can you put together a short and concise pitch, three sentences max?

[Edited at 2017-05-31 14:44 GMT]


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The Misha
Local time: 01:35
Russian to English
+ ...
Oh, and all these years I've been wondering... May 31

Jan Truper wrote:

Like The Misha (whose post showed up late because he/she/it is not paying Proz member, I assume)


... if I am a politically incorrect undesirable of some sort who has been singled out for mandatory appearance before a special troika. Apparently, it's just the matter of a lousy hundred bucks:)

For the record, I am not an "it".


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