By Janet Eastman
oregonlive.com
WWR Article Summary (tl;dr) Janet Eastman takes a look at the unique challenges of selling a business that doesn’t own the land or structure it operates out of.
Oregon
Here’s the ultimate gift for an aspiring entrepreneur: Nimbus, the landmark Ashland boutique, gallery and online store, which collectively rack up to $1 million a year in sales, is being auctioned off with a starting bid of $10,000.
The catch: The inventory has been sold off and the store lease needs to be re-negotiated.
The selling points: The highest bidder would receive a successful, hard-to-duplicate business plus the longtime owner’s guidance on how to boost profits.
The story: Inevitably, people wandering Ashland’s Main Street slow down in front of Nimbus’ storefront windows or wander inside. The business that consumes a third of a block facing the historic downtown Plaza began selling handmade leather goods during the hippie-countercultural era.
Since then, it has become one of the few places in the Northwest to find European-style men’s and women’s fashions and footwear lines like Alberto Pants and Robert Graham shirts, as well as being one of the largest art galleries in the region featuring contemporary American decorative arts and jewelry.
Owner Ken Silverman, 68, who began hammering belts here in his youth, is committed to retiring, and after three years of trying to sell his profitable enterprise through BizBuySell.com, he’s decided the only way he can keep the doors open and the legacy alive is to get attention and start a conversation.
Earlier this month, he announced to customers on his email list that he would auction the business.
Sitting in his office below the main floor of his sprawling store, he’s upfront that he’s not conducting a formal auction.
“‘Bidding’ is just a term I used to provoke interest and encourage someone to consider the opportunity,” he says. “Make me an offer.”
The buyer would receive the Nimbus name, a half century of brand equity, a plan for a downsized store space, store fixtures and what Silverman calls the “secret sauce”: A list of the bestselling merchandise.
Silverman’s goal: To avoid closing a store that opened when Ashland wasn’t the trendy mecca it is today.
Downtown businesses were boarded up in the mid-1960s after travelers were able to bypass Highway 99 with the opening of the Interstate 5 freeway.
At the time, desperate city officials hired consultants to resurrect the prosperity Ashland had known ever since gold was discovered a century earlier in the Rogue Valley.
City officials were advised to promote the Oregon Shakespeare Festival, pull out parking meters and rent vacant buildings to artists and craftspeople to open studios and shops, according to Joe Peterson’s book “Images of America: Ashland.”
In 1971, Brooks Pride Hodapp opened Nimbus Leatherworks at 25 E. Main St. with a $400 loan from his mom. He built a workbench in a corner of the former lawn mower repair shop and created belts, wallets, handbags and accessories. He even lived there for the first few months.
Passersby could see what Hodapp and his crew were selling inside the store with two swinging doors that opened to the sidewalk. Business for leather clothing was good and Hodapp was soon able to buy the store next door.
By 1974, he and his brother-in-law Lenny White had a belt factory that grew to have more than 30 employees.
Silverman, who was hired at Nimbus in 1975, started running the expanded store the next year and began upgrading the offerings to follow the changing lifestyle desires of Baby Boomers.
Clay pots dangling from macrame hangers, Birkenstocks and handmade clothing made way for brands like Generra and Reunion for men, and Joseph Ribkoff, Elana Kattan and Komarov for women.
Silverman became a partner, then eventually bought out Hodapp in 1983.
Thirty-six years later, Silverman is facing the task of finding his replacement.
Selling a Business
Selling a business is not like selling a house, say Jeffrey Nagel and Robynne Whitaker, brokers with NW Real Estate Group/John L. Scott Real Estate of Ashland.
If the business doesn’t own the land or structure it operates out of, the value is based on profits and such factors as the ability to obtain a favorable lease, supplier contacts and owner’s expertise.
“A business that deals with a careful selection of products, like clothing and artwork, needs an owner with a good eye, connections and experience to find products customers want,” says Nagel.
Nagel and Whitaker are not associated with the sale of Nimbus, but they are representing the owner of Eufloria Flowers & Gifts, who wants to retire after 35 years and is willing to train the people who follow in her footsteps.
In addition to the venerable Ashland flower shop’s reputation and corporate accounts, the sale, listed at $68,000, would include about $50,000 in non-floral inventory like statuary, birdbaths and garden-themed gifts, as well as a delivery van, walk-in cooler, refrigerated display case and other trade fixtures inside the rented building.
The brokers envision the new buyer could be an existing retailer who targets spring, summer and fall tourists but would like to extend their profitability into winter. The flower shop’s busy season is from Thanksgiving through Easter, exactly the opposite of most Ashland retail businesses.
“Someone could also expand the business to include weddings and launch an internet business,” says Whitaker. Eufloria’s owner is willing to sell the floral and gift business separately, she adds.
The brokers say other factors, like the threat of wildfires, could impact the value of a business, especially one in a city that depends on tourism.
“Different regions are struggling with different challenges,” says Nagel, who grew up in Sonoma, California, where rolling blackouts are causing major problems for residents and businesses.
To sell Eufloria, Nagel and Whitaker contacted floral associations, schools and programs, and ran ads in a national floral publication and a local community guide.
“The cleaner the business’ books and processes are, the easier it is for a potential owner to see the value,” says Nagel. “The salability of a business depends in large part on the ease of transferring ownership to someone else.”
Stepping Away
After 44 years, Silverman will miss the “world travelers” he has met in his boutique and the locals who turn to Nimbus when they need to dress for a special occasion.
He recognizes online pressures on brick-and-mortar stores, but believes customers will always want a face-to-face experience.
Over the decades, he’s seen busy couples happily shopping together while on vacation and others needing advice on what looks good.
Still, he knows Nimbus could be more nimble.
Instead of the combined three shops – men’s clothing, women’s clothing and the gallery – which consume a third of a downtown block, he suggests consolidating the bestselling merchandise into the gallery space, which has large windows facing the sidewalk plus a basement.
“With the current trends in retail, I believe containing costs of rental plus payroll would lead to an even more profitable enterprise,” he says.
Since he announced his retirement, he’s talked to potential buyers and received one offer contingent on the new owners receiving funds from selling an asset. Like dominoes, when the other transaction fell through, so did the Nimbus deal.
“Others have nibbled and in fact there is a group with three other stores in another state that was showing a little interest, but time is running out,” Silverman says.
When asked to describe the ideal next owner, he said it could be a couple working as buyers or merchandise managers for a high-end department store chain such as Neiman Marcus, Nordstrom or the soon-to-be shuttered Barneys New York.
“They both know the business and want to move to a smaller town with affordable housing and good schools,” Silverman visualizes. “I have never figured out how to find this imaginary couple and now I fear it is probably too late.”
If Silverman can’t find a buyer, he worries that closing one of the city’s anchor businesses would hurt Ashland.
“It would be a major shock and I feel responsible not to leave a big hole,” he says. “I can’t imagine what it would be like if Nimbus closed. I still hold hope someone will come along and take the reins.”
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