[Red_Panda]

How would you go about putting a realistic price on your business if you were to sell it?

Any ideas?
David

[Derek]

Hi

As I understand it if you are a self employed operator doing mainly domestic work there is very little to actually sell. Your euipment would warrant a price.... 'Good will' would be down to you... without you there is no good will

If you have actual contract work then as I understand it, you can sell the contracts.

A data base of customers has to be worth something but I don't know how this would fit in with the data protection act regulations.

Derek

[Chris Bailey]

Hi David

I nearly bought another company 12 months ago.  My main concern was how did I know the asking price was a fair price?

As a general rule of thumb, depending on the business, profitability etc but 50% of turnover.

Got this from my accountant who I got to look through the books and confirm if the price was realistic so if you have a good accountant have a word with him, he will be able to advise more accurately.

Chris

[Shaun_Ashmore]

I am buying a Dry cleaners and the Machines are the most expensive bit so the 50% rule doesn't seem sense as the turnover and profit are quite low.

I do believe that there is some calculation providing that you have something to sell not just machines, as for data protection well how do yellow pages go on when they contact you? at first they were owned by ITT then BT and now another which I can't remember, that is providing you have an upto date database which I think is the most benefitial bit.

Shaun 

[garyj]

A lot of factors come into play when selling a business. For commercial contract cleaning you have to think about how long have you been established, how long have you had the contracts, ltd co or partnership etc. The industry norm seems to be about 1.5 - 2 x net profit or 50% of turnover.

For carpet cleaning I would guesstimate 1 years profit + stock at value.

[woodman]

50p in the pound for turnover is generally the rule of thumb,however in shauns case of course he would be paying for fixtures and fittings which would be  extra by negotiation, plus I assume taking over the lease which has to be factored in.

Goodwill is a bit of a grey area as it's a non tangable asset, lots of us would value the goodwill way above what others would be prepared to pay and some would simply not pay any good will at all.

If you have a business for sale and want out price it sensibly with a percentage for negotiation and move on but don't forget, Mr Gordon Brown will come into play aswell when your accountant does your final return on the business.

[Kinver_Clean]

I have looked at a couple of businesses in the last year or so and not bought either- as you say it is a customer list and if they are not on your doorstep they are not cost effective. I put the money into different areas of marketing and am probably making more out of it anyway. A few years ago I bought some second hand equipment and when I collected it chappie said that there were two contacts included- each is worth £2000 per year for not a lot of work.