What Is Value of this Business?
Small Business Valuation is More Scientific than Many Believe.
When Small Businesses Sell, What Price Do They Sell For?
Frequently business owners don't have a good idea of what their business can sell for. Often times they are working on rumors or "rules of thumb" for their industry. Using these quick and easy methods are almost always wrong.
Business value has many elements but when combined they can provide a very reliable valuation.
Let's take a look at a real life business sale. Although I have changed some information for confidentiality purposes this is an analysis of a real transaction.
Business Value Information
Pool Service Company Sells
The owner of a pool service company has been given bad news about his health and has decided to sell his business. Here are the characteristics of the business:
- Annual revenue $410,000
- 5 employees including the owner (Owner, 1 office person and 3 service/route techs)
- 91 regular customers for residential pool maintenance service
- About 20% of revenue is from pool repair services
- About 60% of the revenue is from credit card processing related to the pool service routes
- The owner works in the business daily and is the only manager
- Net pre-tax profit to the owner - $110,000 per year
- Business is in a leased space
- Business has 3 small pick-up trucks each equipped with about $3,000 worth of tools
- Inventory (primarily chemicals) on hand is about $5,000
- Other assets i.e., furniture, computers, etc valued at $5,000
At What Price Did The Pool Service Company get Sold?
What Price Did the Buyer Pay for this Pool Service Company?
Make your choice from the price ranges to the right. This price range is based on a buyer not assuming any debts of the business and simply buys the operating business and it's assets.
Answer will be posted here after survey closes.