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What has been happening to your net income from the business over the last several years? What is happening to the industry? Is it growing or shrinking? What does the competition look like over the next several years? We write everything so it shows a loss. Most successful jump castle companies stay in business. Neal, My husband and I own a successful jump castle company. We have 40 inflatables and 9 trailers. We have a many clients including churches, businesses, and schools. We are also teachers and want to slow our life down a bit.
How do we determine the value of our business? Susan, what is your net income? How has it changed over the last several years? What are similar businesses selling for? In doing some research, I have always read that a general rule of thumb for selling a business is times net profit. Based on your example, our asking price should be more than 1. Doreen, This is a function of industry. This is absolutely a function of the business you are in and there are no rules of thumb that are helpful in my opinion.
I am interviewing a number of people so that I can recommend someone to do the appraisal but I am still searching.
Why are you hesitant to speak with a biz broker? I am not adamantly opposed to using a broker, and in fact may consider it in the near future. Our business is a franchise, and most buyers of the businesses that have sold are found thru a broker that works with the franchise directly. We have an ad in Craigslist which thus far has had one response from,you guessed it, a broker! We may try bizbuysell next. Any other suggestions are welcome, and thank you so much for your help!
Doreen, Were you able to find a private buyer? I also have a cleaning services and want to sell. I currently have a broker working on some number for us. Last year in November, she gave me some numbers but we were not satisfied. Now with the tax year over and the 1st quarter of , we are hoping for higher value. Like you, I would like to save on the broker fees and sell myself.
Last week I was approached by a hospital to consider selling my two sleep laboratories. With insurance reimbursements going lower by the year, I am seriously considering it. My question is this, I pay doctors to read my reports about 28 percent of gross. If this hospital purchases my labs, they will get that 28percent bc they are medical doctors and I am not.
Should I estimate my ask based on my personal income, or mine, plus the 28 percent I pay the doctors. Any help would be appreciated. My next formal meeting with them is April 16th. Thanks so much for any feedback! That will also increase the price…sweet! Thanks in advance for you great expertise.
Why are you interested in selling? What are other shops going for? Did you buy the shops 3 years ago? So was seeing with my sales and gross and net what you would ask? Neal did you forget my question haha Please help me!!! I was wondering what to ask for my cell phone sales and repair business If I wanted to sell just a little FYI I am at 85k profit right now since Jan 1st.
We have a bakery in Lynchburg, VA. Needless to say, the name was badly tarnished in the mean-time. We had a wholesale baking business of our own in a near-by town, and badly needed a bigger facility, so when we heard the building was available, we decided to go retail and re-open that bakery.
Although we kept our own name and recipes,just the fact that we were in that building gave people an expectation, good and bad both. We had an incredibly intense first year, as we learned the retail ropes, and worked really hard at restoring the name. We not only have done that, but the name is gaining elite status in Lynchburg again. The bakery has enormous potential, with enough space to add a sandwich shop or an ice cream parlor or both. After all the hard work it seems to be too bad to leave it now, never-the-less, it seems the best move for our family. One employee stayed on and is taking over a management position.
She would like to stay on with who-ever buys the bakery. Do you have a way to come up with a reasonable sale price , considering the fact that the business has not yet generated any free cash flow. We are renting the building and most of the equipment. This is an involved question. Without any cash flow, you really have a job and not a business. I know that sounds harsh but that is the reality.
It just seems high to me. I looked through bizbuysell and other business listing sites and most of the businesses showing a profit appear to be going for at most 3X of net. For example this business I found looks to making good money, but the asking price is only 2x of cash flow. Assuming owner is working and manager needs to be hired, the net may be around 50K less which would still make the asking only 3X times net.
Is there a different way to assess the value based on net depending on the type of business being sold? Does a growing restaurant use the same valuation formula as a growing service business? How does that work? I guessed your business value at 2 to 3 x gross…. It may not be the multiple for your industry b. Your growth has to have some value as well. I have no idea as to how a restaurant vs a service company is valued. Would you say the business broker selling the business would qualify as the appraiser or does it make sense to have a separate appraiser value it since they are neutral in the transaction?
Also, do you have a blog post discussing how to go about find a good business broker or if one is even necessary in this day and age of the internet? Not enough money in the bank to build another new business. Risk to the business is this: Its an easy business to duplicate if someone has enough capital. Also, competitors could bring down the price some which would force us to do the same, thus hurting our margins. I would rather sell the business while its growing and has a decent profit to make it look appealing.
However, once it has K of revenue, a new owner could hire a manager, be hands off, and still net K. How much is that worth? I have a simple eco-friendly consumer business in the West coast where customer order a service on our website. Its an innovative new business, highly rated, and growing. Its been in business for 2 years and the sales have been increasing every single month. While the overall sales are not high, the profit margins are good once we hit higher gross sales. In , we did about 70K in sales, was K, and I expect to be over K.
Currently we have 1 FT and 2 PT. I estimate once we do K in sales. Why am I considering selling you ask? Any ideas of how I can price this? My business is not a gas station or store, but its a very simple service with a reusable product in a large consumer market. What is your net? What has your net been over the last 3 years? If you did that, what would happen to your net?
If I hired this manager: The only question that still lingers is what the risk is to your business? What might put your out of business over the next 5 years? I own a successful services website in the UK. We are a band name in our sector and rank 1 for thousands of phrases in our market sector globally. We receive visitors to our site each month it has risen for 50 a week since We take 1 million and rising inquiries for our services each year, We convert those inquiries into around K in sales.
We pass all our work out to a supplier who we pay K per annul. The supplier now wants to buy the company and our site. We have one member of staff who takes phone inquiries and carries out all duties such as packing up work and sending out. Our supplier can easily take over the business and we feel that with more technical knowledge of the trade their GEo location for walk in customers, better pricing strategy, more staff to respond to the huge inquires that they can easily build the business in a multi million turnover, and increase profits dramatically.
They have made a proposition whereby they pay for the business from revenue over a year period. How can i come up with a sensible value for this business in this scenario? Why not partner with them instead? In terms of drilling down to a price, again, you are going to need either a consultant or find out what similar businesses are going for. Thanks for your speedy response.
In our original talks we proposed that we somehow merge our business with theirs. They handle the workload — We focus on branding market. And we share the profit somehow. But they have been in talks and now want to buy. And from our original proposals I can see why.
For us to protect our IP we would need them to re-brand their business and offer some trading guarantees. Otherwise our business could be driven to the ground. My partner wants to free up time and wants to move away from the business. I too have other projects and we both would like to just lock in the revenue stream. I also feel the business has done very well and I know it provides a well needed service. I also see that in our supplier buys us out it will grow into a fantastic business for them and make a better one for the public.
Their is a sense of achievement in making that happen. My partner and I were thinking along of the lines of: If we could lock it a return each month that would nearly match what we get close a deal and let them take it over — it would tick a lot of boxes. This might seem like bad business. Who can or where can i find someone to help me make the right decisions and maximize the best deal from what is on offer.
Do you have any more advice to give? Neal, I own small courier company hat I have been running for several years. I have one full time employee, and several part-time employees well, I.
The last two years have been much lower by choice on our part not to chase work and wear out equipment on non profitable work. If this hospital purchases my labs, they will get that 28percent bc they are medical doctors and I am not. Below is a range of fees at each deal value level. Should I stick to my guns and get what I feel is fair or does that not even matter? Can you please send me his contact information?
As I do some of the deliveries myself, as well as answering the phone and all all office work… and I have kept fixed operating costs very low… I do okay. However, if I did no deliveries myself and I hired someone to handle the phone and office work, I would net very little. Does this mean that my business has no value? Thomas, It has a lot of value to you on many different levels. But what you have is a job really. You still may be able to sell it to someone who wants what you have — freedom and self-determination.
But unless you could hire someone to do the work and still make a profit, the number of buyers are limited and that reduces the price. Hi Neal, Where would I find the multiplier for my business. I own a non asset based freight brokerage, in business for 13 years. Also, looking at the exercise above, should payroll be counted in the expenses?
Susan, I would just Google it to see if you can find the multiplier. I would absolutely count payroll as an expense. Thanks very much as I appreciate your assistance and input. I think a good tactic would be to let them throw out the first number and justify it. Is your growth tracking with the industry? What is your competitive edge? Does your firm depend on on you or do you have strong systems in place? I have a small manufacturer business.
I have a concern ,if what I am doing it is well or no. I started my business in Is this a good grow for a manufacturer in 4 years of business? If I want to sell the business how much could I ask for? I am very disappointed of what am doing. I was expecting make more money. So you have a great business if this keeps up.
The problem may be that you started out slow and only now things are turning around. What are the prospects for the future? I am guessing the volumes with there juice will be units per year.
What price for the assets and should I ask for a salery for 2 years to get the project flowing for the next 2 years. Business people who are looking to sell their consulting business usually underestimate the complexities involved in the whole sale process. As a result, they frequently sell their businesses for a price that is lower than fair value, wasting an excellent opportunity for making a good amount of money. Generally consulting companies can be defined as a consulting company that provides consulting services.
When a Consulting business owner decides to sell their business, it possible to execute an outright sale or merge it to another consulting business. But why is this happening? The simplest explanation is that one company has something to offer that the other company wants. Sometimes there are mega-mergers which changes the way people do business in the US. Take a look at these tips and learn how to sell your business for the best price: The first thing you have to do is understand how the sale process really works.
Then, gather all financial data from the past three to five years. Prepare a report with all information and provide your potential buyers whenever they ask. A Consulting business is very difficult to run, after all there are a lot of moving pieces. A professional broker can help you calculate the exact value of your consulting company.
In this case, a business broker could be very handy. Take a look at these metrics and make sure you have all the answers: After all, understanding what potential buyers want is essential to the success of any business transaction. They would like to be aware of the quality of management, evidence of strong and consistent revenue growth, retention of key clients as well as market presence. You have already analyzed and calculated what your consulting business is worth, but the math is not over.
Now you must factor in various elements that can change the value of your business. But if you still have questions, you can always reach out for professional help. The most important thing is to know exactly which aspects of your consulting business make your business more valuable. Before analyzing the last 10 years numbers, two important details: The second is, since there were very few consulting business sold only 61 , the average multiple and average sales price are bigger than it normally would be, respectively 3.
Those are particularly high numbers, and a multiple of 3.
And why is that? Taking the time to get your employees licensed now will help you down the road when you are searching for the perfect buyer. A team of skilled employees is one of the most important factors in buying a business. Buyers will want to be sure they are walking into an established, organized business where the employees take pride in their work and are accountable for quality and service.
To create this strong team environment in your business, we recommend providing continuous training to all of your employees. By constantly training your employees, they will not only provide higher quality work but they will also decrease your liability, giving buyers the peace of mind that your business is reputable and efficient.
If you have not actually created a training program for your employees, it is never too late to start. Utilize your team to create training manuals for new employees so that they learn the correct way to do things from day 1. Establishing a cross-training program can also prevent delays or errors should an experienced employee miss work. Finally, consider designing an annual training program for your technicians so that they are able to constantly update their skills and also stay fresh on new techniques.
To someone who is unfamiliar with the industry, plumbing may seem like a cut and dry type of business but that could not be further from the truth. If your company mainly focuses on plumbing needs, you may want to consider bringing on an HVAC tech or two. HVAC and plumbing go hand in hand and oftentimes, business owners in one sector will add the services of the other to increase cash flow and build a customer base.
You could also research the trends in your industry to see where adding an additional service may be feasible. Consumer spending is at an all-time high since the recession and more people are willing to pay for luxury items in their home. Examples of the items your clients might buy include water filtration, tankless water heaters, and wireless controls for their HVAC systems. Someday you will decide to explore your options for a sale and hopefully, these 4 tips can help you prepare. By understanding the monetary and operational aspects of your business, you can begin to see where you are succeeding and where you may need some improvement to reach your ultimate goals.