What is goodwill?

What is goodwill? To whom does it apply and what is it worth?

When a business, particularly in a service industry, is sold as an ongoing concern, often a list of past clients goes with it as part of the goodwill process.

For these clients to be retained, the new business owners should look at ways of ensuring that the clients continue to receive the same sort of service or even better.

If that falls short of the mark then the clients will quickly move on and the goodwill that has been paid for quickly dissipates.

After nearly thirty years of being a client of a service industry business, I was very surprised when it changed hands recently. As a sign of loyalty I continued to make use of the new business and, although understanding some of the teething problems of the new owners, I was totally unprepared for the different approach.

When asked if they could do a particular service, I was told they could and would do it quickly. I was not told that they currently couldn’t and would, behind my back, be subcontracting it out, thus causing delays.

In the end I even had to track down parts. I dropped the item to be assessed and repaired one day earlier than planned so they could get it done even quicker.

However the two or three day turnaround lasted about a week and a half. For me it has been a costly learning experience in terms of money, time lost and added stress.

In today’s world of social media, where experiences are shared and recommendations sought; should I withdraw all the previously made positive comments that were earned by the former owners?

Having tried to continue to be a loyal client, has my goodwill to the new business owners been lost? Sadly the answer to both questions is probably yes. Greg Tuck, Warragul