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What would you value this business at?

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What would you value this business at?

Old 02-05-2015, 03:21 PM
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Default What would you value this business at?

What would you pay for a business that made 85K per yr. profit?

The business is established, and I don't think there is much room to make additional income from the existing model.
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Old 02-05-2015, 03:31 PM
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Depends on what the business does, first.

There is much more info needed to be accurate. If you just want a guess, then we have enough info.
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Old 02-05-2015, 03:37 PM
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I'll take a guess, 7 times earnings, or 600K maybe
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Old 02-05-2015, 03:40 PM
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$425k

And if you're buying it tie in previous owner(s) in such a way they can make more by helping you be profitable. They need some skin in the game for X number of years after the sale to help you continue making that $85k (like relationships with existing clients etc).
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Old 02-05-2015, 03:41 PM
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The OP needs to disclose a lot more information and data so that we can make grossly unreliable estimates of value.
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Old 02-05-2015, 03:42 PM
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As stated, depends on the business and what it takes to sustain it. Is there room to grow and expand? Competition? What's it going to do to you? 7 days a week? 85k is not going to get you where you want to go. Get a 2nd job and avoid the hassle!
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Old 02-05-2015, 03:46 PM
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Originally Posted by rbhankins001 View Post
$425k

And if you're buying it tie in previous owner(s) in such a way they can make more by helping you be profitable. They need some skin in the game for X number of years after the sale to help you continue making that $85k (like relationships with existing clients etc).
And to prevent the previous owner from opening up a competing business the after he closes on this one.

Need much more info - gross sales, assets, etc.
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Old 02-05-2015, 03:52 PM
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current assets?
Debt?
What does it do?
Are there any "key" employees that make it what it is?

Lots of variables, and I'm no wealthy guy myself but as an entrepreneur without info its full of potholes.
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Old 02-05-2015, 03:56 PM
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I can't get into things too deep but the business is in children's entertainment. They gross 10X's profit currently with 7 years left on the lease at the existing rate. There would be a no compete clause built into any sale but I can't stop someone else from opening something similar across the street or around the block.

To me 85K is a salary not a good business as it will take up 50+ hours of my time every week for sure. I'm just looking to see how far off base you think the seller is with his asking price.
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Old 02-05-2015, 03:58 PM
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As everyone has said, way too many variables to even give you a ball park value based on potential income alone.
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Old 02-05-2015, 03:58 PM
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Originally Posted by Tireless View Post
The OP needs to disclose a lot more information and data so that we can make grossly unreliable estimates of value.
This.

Just PM Jersus.
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Old 02-05-2015, 04:00 PM
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Originally Posted by Dan Hicks 2 View Post
current assets?
Debt?
What does it do?
Are there any "key" employees that make it what it is?

Lots of variables, and I'm no wealthy guy myself but as an entrepreneur without info its full of potholes.
Assets = 70K
Debt= 0

No key employees
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Old 02-05-2015, 04:07 PM
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Does the current owner take a salary.
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Old 02-05-2015, 04:08 PM
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I have owned my business for over 20 years and would like to retire in 5 - 10 years. I have often wondered how you properly determine the value of a business. There are so many variables involved. Like to hear other business owners input
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Old 02-05-2015, 04:11 PM
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Originally Posted by Hoffy View Post
I have owned my business for over 20 years and would like to retire in 5 - 10 years. I have often wondered how you properly determine the value of a business. There are so many variables involved. Like to hear other business owners input
First you need to know what the business is to start the process. Website, Commercial RE and donut shop are going to have large differences in valuations.
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Old 02-05-2015, 04:11 PM
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Example, campgrounds trade around an 8 cap on average. Based on NOI.

Even then it's going to depend on other factors that can swing the price.
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Old 02-05-2015, 04:13 PM
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Originally Posted by Think Done Deals View Post
Does the current owner take a salary.
No
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Old 02-05-2015, 04:13 PM
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What is the year over year of the revenue and profit.... basing value from single year profit alone is generally fool hearty. If the business has no growth, it is likely a 1x plus assets depending on liabilities (not necessarily debt). If it is declining, not much more than asset value. The growth rate and scalability of the business determines the multiplier.

Just saw the current owner doesn't take a salary so effectively the business has no profit. The growth better be good or it is a dog with fleas.
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Old 02-05-2015, 04:14 PM
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Your right, you'd be buying a job.

Based on the info given I feel like I'd just be guessing.
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Old 02-05-2015, 04:14 PM
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sub'd
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