For Sale: Small Independent Directory Publisher

by Dick Larkin on January 10, 2010

For Sale

I received word from an old friend that he is interested in selling his small (around $1 million revenue) independent Yellow Pages publishing business.

It’s located in the Southern United States, and would need to be owner operated to be successful.

The owner has experienced health problems, and needs to sell to someone who can jump in and lead the sales effort.

If you are seriously interested, please send me your complete contact information at Dick [at] ypcommando [dot] com.

I will forward your information to him, and if he is interested in contacting you, he will.  i will not disclose any information about the business as he does not want employees or competitors to know.

So is owning a directory business a good idea, or is it jumping onto a sinking ship?

I can’t speak for this individual business, but here are some of the characteristics about Yellow Pages businesses.

  • Directories have fairly high fixed costs, and fairly low marginal costs.  In other words, once you cover the cost of purchasing listings, printing, and distributing, sales are highly profitable.  You basically have the costs of sales commissions (around 25%) a very low cost to produce the ad (under $20) and hardly any cost to add it into the directory.  So a well developed directory becomes very profitable.
  • I’ve found that advertisers like the concept of internet advertising, but they will pay for the reality of traditional media if the cost and risk are offset by the value delivered.  A low priced, well developed local directory will almost always outperform online media dollar-for-dollar for the local advertiser.  This is especially for smaller towns, not so much for major metro markets.
  • You own your media, and can control the quality.  Selling ads on Google is not a sustainable competitive advantage because everyone can do the same for one advertiser.  If you invest in and produce an outstanding local directory, you alone control who is featured and how.  You set your own rates, and make the book as good as you want it to be.
  • Directories publish every year, so you can build a very strong renewal business over time that rewards loyal customers.
  • You can outsource the back office operations to a handful of outstanding companies that do everything but sell.  You can invest your money into selling, and let someone else produce the final product.

On the bad side . . .

  • Yellow Pages is widely considered to be a dying media.  If you doubt the viability of printed media, you will be right.
  • Cash flow for directories can be tough.  Many advertisers expect to pay after the book is delivered, but sales reps need to be paid upon sale.  A number of directory companies have fallen on  hard times because of cash flow rather than product usage.
  • Competition is fierce.  There is no end to the number of advertising requests that local merchants get.  That’s why good sales people are so valuable.

If you’re interested, send me your complete contact information to Dick [at] ypcommando [dot] com

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