17 ms·
This is nuts....4x revenue? It would have to make $10,000,000+ for that to make sense. I really don't want to argue and respect that there are many opinions o
by gamechangr 9y ago
This is nuts....4x revenue?
It would have to make $10,000,000+ for that to make sense.
I really don't want to argue and respect that there are many opinions out there (we all can have one), but OP please ask around to an actual business broker. I have on three businesses this year.
The amount of revenue is really important. Basically - can a buyer imagine living off the business? What's his opportunity to cost? (like it takes 15 hrs a week away from other investments). How much capital would someone need to build it from scratch (might be time in your case).
That's what I ask when I am considering buying.
- nostrademons 9y agoI think the contrast between our replies is illustrative of why there's so little liquidity in small businesses. Mine was basically "In strictly financial terms, you're nuts to sell for $85-100K." Yours was "As a buyer, you're nuts to buy for more than "$85-100K." What's going on economically is that transaction costs will eat up most of any surplus for a business worth < $1M, and so both statements are true. In practice, the small business owners I know usually just milk their business into the ground. They treat it like an annuity that generates $X of additional income, and if it ceases to become profitable or worth the trouble, they just shut it down.
- gamechangr 9y agoAgreed. > the small business owners I know usually just milk their business into the ground. You're right... I see it all the time. It's hard to someone to even want to buy enough to make an offer. If they do... I always try to flip the role. "how much would you offer for a business that supposedly made $95,000 - in an industry that you maybe unfamiliar with?" That's what a buyer would pay.