[jacko]

Hi Guys

Has anyone experience or knowledge re putting a value on a business?
I am sole trader. It is easy to cost the fixed assets like van /machinery etc.. but it is the goodwill, customer base etc that is a grey area. Some people have advised me it should be X multiplied by latest anual profit, others have said it is the rate of growth..

Your views would be much appreciated...

[The Great One]

HI

Hey Jacko, long time to hear?

Are you selling up and doing what?

Drop me a line

Regards

Martin

[calmore]

Well, there are companies out there who value businesses...for a fee!

Valuing a business is an art..not a science. It's only worth what someone is willing to pay for it! If valuing the business yourself, you need to look at it from an outsider's point of view. How much do similar businesses sell for on ebay? How much do they sell for elsewhere?

You need to take into account profits, assets, debts, customer base, years trading etc..etc before you can come to a value.

Some very rough guidelines are here: http://www.businesstown.com/valuing/guideline.asp

[carpetguy]

www.bdo.co.uk

32 pages of really useful information !

rob

[Matt Lindus]

Another one bite's the dust!

[jacko]

Thanks for replies so far lads - Martin good to hear from you - will pm you.  Matt, sorry mate no dust planning on being bitten!

Truth is someone has approached me re a 45% share of my business. This person would also be a major asset to me (and the business) we would run 2 vans.
I work  at max capacity often booked up 5 weeks ahead and regularly either have to turn work away or sub to someone. 80% of my calls are refferals or repeats. Marketing costs minimal. Operating profit up 68% on previous year. So to my mind the business is in a healthy shape and should be valued accordingly..

 

[Doug Holloway]

Hi Jacko

Good to hear you are doing well.

I would suggest that reaching an amicable settlement is vital in this case as you both want to be happy otherwise tensions will surface later.

My daughter is buying out her boss ( beautician) and then empolying her, another case where anamicale agreement is needed.

Cheers

Doug

[carpetguy]

JACKO

From your statements, you are running a successful operation and to take a partner on board, is fraught with danger !!!!!!!!!!!!!

The classic response, you will get from all marketing and business pro's will be..................increase your  charges, and stay in control.

The only reason for taking on a partner, should be.................to benefit you !!!!!!!!!!!

YOU,  have built the business and YOU are the one who stands to lose out, if things don't work out and in partnerships, it's very rare, to find a truly 50 / 50 working relationship.

However, none of us know your potential partner.

Finally................how do those closest to you feel about the proposal, because, in the event of the partnership failing to shine, the repercussions spill over, into the family.

All of this sounds negative, but, it's what your bank manager / your accountant / your family will be asking.

Whatever you do, I wish you the best of luck and congratulate you on your achievements to date, you appear to have a successful formula.

[John Kelly]

I would second that. I have seen loads of partnerships fall apart. I'm in partnership with my wife so I just do as I'm told, seems to work well
Our local dry cleaners who we use for cleaning smoke damaged cleaning was approached in a similar manner. What he did was told him he would employ him for 1 year. If after that time his contribution drove the business forward and increased sales he would take him on as a partner. It worked and trade doubled.

[carpetguy]

John

I've had the good fortune to work in a similar partnership as yours.

rob
 

[Ian Rochester]

You sound as if you already have a very healthy business, why would you want to sell almost half of your business, what  amazing skills or contacts would this person bring to the business that warrants them being a partner?

Would you not be better off looking down the employment route and pay someone a decent percentage of their contribution to turnover so that they have an incentive to work hard and grow the business.  If necessary put an end of year bonus on.

What happens if you fall out and decide that in a years time you no longer want them as a business partner, how do you buy them out and how much will it cost you? 

If your business was on the back foot and you needed to bring in someone to turn it around and market it, then yes a partnership would be a good way of getting the right person on board.  However, your business does not sound like that, therefore I can't understand why you would want to contemplate it.