Operations

How Do You Value A Competitor’s Phone Number?

Posted on March 25, 2009 by LCT Staff - Also by this author - About the author

MARLTON, N.J. — In today’s economic environment, opportunities may arise where you get offered to buy a competitor’s phone number. Although this seems like a straight forward purchase, before signing on the bottom line consider the advice of operators who have already walked this walk.

Alex Mayer, AAA Guaranteed On Time Limousine Service, Clinton, NJ:

The phone number is only as good as the sales behind it. Buying a phone number is just like buying a company. You want to understand what the annual sales behind it are. Additionally, understand their pricing structure. There is no point in buying the phone of a company whose prices are considerably different than yours. You will get the business but you won’t keep it. The phone number alone doesn’t guarantee you the business.

Scott Solombrino, DavEl Chauffeured Transportation Network, Boston:

I think it’s better to make a deal with the person selling the number to give a commission of something like 10% of the business that you get from the number for a period of three years then go down to 5% and wind down. Ask the person selling to continue to manage the bookings or hire someone to manage the bookings. I think this system works better because there is no way to know the real value.

Alex Malek, Worldwide Limousines, Miami:

In 2008, I purchased two companies’ numbers. I looked at the sales volume and the payroll. It is important that you do your due diligence. Understand the numbers before you put a dollar on it. I recommend having the person sign a non-compete. Keep the numbers in separate profit centers that way you can track the return on the investment. Overall, I don’t like this idea. I feel that there are better ways to get business then this.

Russ Cooke, Town Car International, Boston:

Do your due diligence on the company — understand who is on the other end of that phone. Where is the revenue coming from? Is it corporate, leisure, affiliate? You still need to understand the customer base and what the probability of closing that business is. The rule of thumb is that you will lose half of the business right out of the gate. It’s no different than acquiring a business that has assets — you still need to do your homework.

Peter Giordano, Carizma Limousine Ltd., Valley Stream, N.Y.:

The number is only as good as the number is going to ring. I recommend staying away from this. I think there are better ways to spend that same money like advertising, web, or sales. You are not buying anything tangible with equity. Just selling me a phone number doesn’t mean you get the business.

Source: Linda Moore, LCT Magazine

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