Business Valuation

[Robert Lambie]

Hard one in my opinion mate..
What I would offer he might refuse as an insult.. 40K isn’t nothing obviously, but its not a fortune these days.
Customers, machines etc come with that I know.. But you don’t necessarily know who will continue to deal with “you”. I know some customers we have that call us and only want to deal with “me” & im not the boss. I also know some that want it vice versa. We have customers that in one year may spend 60 thousand but then only spend 2 grand each year after that simply because we have re-signed their whole place. They use us for damages and new stuff coming in after that but we have had our biggest bite at the apple. There can be repeat customers on the books that a may have decided not to use this guy anymore do to being slow or inconsistent in his quality of work. But again they still show as being repeat customers on his books.
I’m saying this, but it maybe a great start! Who am I to say your wrong?
Just don’t believe everything in black and white.
Why not shell out 20 grand and start fresh with all new gear etc. custom build things to suit you at half the cost.
Get a large cutter, good software, computer etc you get warranties with it.
Join our group and buy top brand vinyl’s at the lowest prices. Get a small/medium sized used van. Get some decent power tools and a little stock, brochures etc
If it exceeds 20 grand then spend a little more but at least your saving almost half.
Your kit is all new, you have the experience. I’m sure you will easily do more than 40 grand.
Stick with vinyl’s first if that’s your strong point. If you can wrap like I know you can. Then farm yourself out to others companies and get some of your own customers.
It will be tuff at first but im sure with the right amount of enthusiasm you will make it work. 😉

[Phill Fenton]

I agree with most of what Rob has said (apart from the van – buy a new one 😉 ). You should also consider the alternative of setting up a new business.

The only real advantage in buying this business is you will be getting it’s “goodwill”. Materials and equipment should be valued at cost but how do you measure goodwill? You need to establish the what type of reputation he has. If he has a poor reputation you would certainly be better off starting fresh. I would phone a random selection of his customers explain that you are thinking of buying this business and ask for their honest opinion. If you can establish that there is a lot of goodwill in his business then it may be seriously worth considering. However, If he has a poor reputation then you will want to stay clear.

As Rob has already said – you should be able to clear 40K turnover from a standing start in your first year if you go about things the right way.

I believe marketing of their business is the part that worries new start up companies the most. Without customers you don’t have a business so I can understand how tempting it is to buy an established company. But please ensure it has a good reputation if you decide to go down this routel.

You have 17 years signmaking experience already which is 17 years more experience then I had when I first started. So this gives you a good advantage over many.

Good luck in whatever you decide to do and keep us posted 😀

[Mike Brown]

…there have been two such situation local to me in recent years that I remember…and in both cases the business was sold for about £10k.

This is no more than it would cost to set up the same basic thing yourself. In signmaking – particularly with an established local business, so much is built up around the work, skill and service of the individual signmaker – when he retires then all that goes anyway…talking over such a business is normally done to aquire assets with the hope that some customers won’t wander.

good luck and let us know how you get on…

more soon

mikethesign

[jon vital]

I doubt his equipment is worth more than about £1000 second hand and his turnover is not that great so in this case you would be better off investing in all new stuff for your own business.

[Andy Gorman]

Having done some maths on what it would cost for me to start from scratch, the amount being asked is about the same. Of course I would be getting old equipment with no warranties if I bought this bloke’s business. Sod’s law says it will all break down in 6 months time.

Another thing, 50% of his turnover is with 1 customer. I have spoken to them and they are happy to keep giving the work to me if I take over. However, 50% is a lot of “eggs in one basket” don’t you think?

Someone mentioned easily doing 40k in the first year. How many of you got off the ground that easily when you first started on your own, and I mean ON YOUR OWN? What experiences do you all have of your first year?

[David Arch]

I may not be the best person to speak on this subject as I have only been self imployed for about 5 months, and I am only 20 so have very little experience. But having said all that I have turned over about 22 grand in 5 months, that is completely from scratch with no existing customers.

I was quite lucky and got a big contract with the local shopping centre and market which was about 50% of the turnover. I find the harder I work the more I earn, the same with anything.

Hope my bit helps

[Fat Bob]

Hi Guys
If I May. The Usual way to price a business for sale is three times the amount of PROFIT turned over in the last recorded year as for worrying about about 50% from one customer, well You will find that those with regular customers that abot 80 % of thier business is done with about 20%
of thier customer base. so nothing unusal there. as for worrying how much you will take in a year forget it start with how much do YOU NEED
to live.
Hope this helps in some way