How Do You Go About Selling A Real Estate Photography Business?

April 6th, 2015

REPBForSaleStephen poses the following problem/question:

Because of family matters, I have to give up my business on the east coast and move across the country. My questions aren’t about starting up again, you have plenty of posts on that. My question is what to do with my business on the east coast that I put in 10 years building? I don’t want to just give it up. So I would like to know if you have any advice on selling my business to another photographer? I know you originally worked in Washington and are now in Oregon. what did you do with all your clients in Washington when you moved?

First of all I don’t have any first hand experience with selling businesses. Our business in the Seattle area was a real estate business. I shot almost exclusively my wife’s listings. I was the guy on my wife’s team that got the properties on the market and did all the marketing. Real estate agents typical don’t sell their businesses, at least I’ve never heard of it. The reason is, helping people sell their homes is not a commodity type business. It’s very personalized business. My wife’s clients worked with her because they liked working with her and trusted her to guide them though the home selling process and some friend or family member recommended her. Also, after we sold their home, they typically didn’t need our services again for many years. Realtors need to keep coming up with new clients continually, unlike a real estate photography business.

A real estate photography business is probably more of a commodity service than a listing agents business, although many of your real estate photography clients may use your service because they personally like doing business with you and like your work and you can’t sell that to someone else.

Here are some of my thoughts on selling your real estate photography business:

  1. Typically businesses are sold based on the yearly income and other factors the owner can document so documenting how much income your business generates is key to it’s value.
  2. Another factor determining the worth of your company is how organized your are. That is, can you document and train someone else to generate the same income you are now generating, or is it all in your head?
  3. You may be able to find someone that will give you cash for your business but my guess is that you are more likely to find someone that will work for you on a contract basis, to be trained and then work towards taking over the business while you manage the company and pay them out of the proceeds of their work. Then after some mutually agreed upon time or amount of money paid to you from the company, they take over completely.

Does anyone have some first hand experience with selling real estate photography businesses that has advice for Stephen? I think you could sell a real estate photography business if you can take the time to find a responsible future owner that is willing to be trained and go through a transition period where you remain in control of the company and take a share of the income during the transition.

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12 Responses to “How Do You Go About Selling A Real Estate Photography Business?”

  • Photographers have been known to sell off their books of business and/or physical studios.

    Since you probably don’t have time to transition the business in a responsible and structured manner as Larry has recommended, I see no problem with selling it off to a fellow RE shooter or local.

    Just realize one major thing, as soon word gets out that you’re leaving altogether, your competitors will move in to fill the void. A real problem may then be encountered trying to sell it for anything more than one dollar.

    As such, also be leary of a local claiming to buy you out as soon as you leave, then decline at the last minute and simply asimilate your clientele for free. You’re a smart enough cookie to seek out a trusted local and coordinate a mutual buyout/turnover that your clients will appreciate.

    If you had a good book, numbers and market, I’d look into making an offer!
    Kind of a hybrid approach… too bad I’m in the Chicago and Midwest market.

  • Could Rembrandt sell his art business to another artist? The problem with creative businesses like photography is that your clients are hiring you, not your business. When you leave the market, that relationship has no value to another photographer.

  • Are you going to be doing photography when you settle at your new location? Because if you are then you’re not really selling a business. You’re simply selling a client list. And since you don’t own your clients all you’re really selling is a list of leads. Which is worth about $50 if you’ve got it all organized on a spreadsheet. Unless they’re the Glengarry Leads…that’s a whole other story.

  • @Steve, photographers can and have sold their business in the past so it can be done. But, they were setup in such a way that made it possible. One, they did not have a business name that was tied to their name, it was more generic so to speak. Two, they had a stable of photographers (not just themselves) working for them that had been trained to get “the look”, so a person wasn’t necessarily going to get the owner when they came in, but they were going to get the same “experience”….which in the end, is all most care about…

    If you think you might one day sell your business, then it is advised for you to NOT name your business after yourself, for it too closely ties the business with the owner..and it makes it less desirable to purchase

    As a sole proprietor though, I would have to agree with Larry, your business is based upon YOU, and only YOU…how do you put a value on that for someone else..

  • Unless you have signed contracts that require each of your clients to purchase a set amount of photo packages per year all you have to sell is the following:
    1. physical assets of the business (photo equipment, office equipment, etc.)
    2. proprietary processes and practices (if any) along with documented work instructions, processes and training materials
    3. good will associated with the reputation of the business (easier done if your name isn’t part of the business name…i.e Acme Photo instead of John Doe Photography)
    4. your willingness to assist with client transition
    5. your ability to provide consulting services and client support during and after the sale for a defined period of time

    Once you find an interested buyer the most common way to value a business such as RE photography would be to arrive at a sales price based on an agreed value for the items listed plus a percentage of the previous years sales/profits. However, the business only has that value if you can guarantee the sales volume after the sale. To address the “lost business” aspect that comes with the transition, a sales agreement would typically specify the price for a given sales volume and a stipulation that adjusts the final sales price based on actual sales for a defined period of time. (typically the next 12 months).

    Without customer contracts you’ll most likely not find a bank willing to finance the purchase. Unless the buyer is well of financially you’ll have to finance the sale yourself with installment payments being made from future earnings of the business you’re selling. Since the ability to get paid in a sale such as this is dependent on the business continuing to be successful you’ll want to make sure you sell to someone who has the ability to actually maintain/grow the business you’ve built.

  • Stephen – where on the east coast are you located? I would be interested in working with you to take over your business on terms similar to what Larry proposed above. If you e-mail me at f2prep@gmail.com, I can reply with my cell number so we can talk.

  • Larry is correct, documenting how much your business makes is key to any financial transaction. Ten years of documented history would very helpful to an acquirer.

    I’ve been running VHT Studios for 16 years now and we have helped quite a few owners with similar situations over the years. As some of the other commenters mentioned, unless the business was built to be sold (run without you), the value is most likely tied up in your personal relationships and service you personally provide to your clients.
    In many cases the way to benefit from that value is by assisting the acquirer in retaining the business you built and receiving income in an earn out over time.

    Some of the most common questions you’ll get when talking to someone about taking on your business include;
    – Do you have contracts in place, anything that guarantees continued volume?
    – What differentiates you the most in the market that would be staying with the business?
    – Do you own the right to the images that you’ve shot the last ten years?
    – What is the competition like in your area?
    – Can you help in finding new photographer(s) and introducing them to your clients?
    – What are the opportunities for growth in your area?
    – What is your company’s reputation? Quick and Cheap, High End, Tech Savvy, etc.
    – Makeup of your client list; how much is the average shoot, how many regulars, how many new clients.
    – What will you be able to do to make it a smooth transition

    If your concern is just as much for your clients as it is the financial side of things for you, then you definitely want someone who understands all the effort you’ve put into building your business over the last ten years, the expectations your clients have and someone who is very committed to seeing it continue to thrive and grow – especially if you work out an earn out type of agreement.
    If you are interested in talking, please send me a note brian@vht.com or (847) 544-7712

  • Hi Stephen, I am working in Northern NJ and NY. We can discuss your bussiness. This is my email if you are interesting manuelbordaphotography@gmail.com

  • What Steve Mann said.

  • I’ve sold many businesses, never a photography business. Mine were mostly restaurants, usually a tough sale. They all worked and I got paid.

    Try to find an experienced, reputable business broker. See what her/his advice is re: salability. Look-up under “business opportunities” in your area.

    If salable, get a down payment and finance the deal. Secure the carrying note by real estate, if possible. I would not hire someone with the expectation they will buy you out down the road. Very risky.

    Plan to spend time (1-3 months) with the new owner. You want to do everything possible to help him succeed (and pay the note). Unfortunately, many buyers don’t want the old owner around. Foolish but true.

  • When you arrive in your new city, are you going to look to buy an existing photography business or are you going to go out on your own, open a brand new shop, and build it from the ground up? Think about the factors would encourage you to buy an existing business in your new city, and see if the business you want to sell has any of those attributes.

    If I was moving into the market you are leaving, I would rather go out and build my own business, especially now that one of the competitors has just left the market.

  • Where on the East Coast?

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