Buying a business (Advice is welcome)

Discussion in 'General Chat' started by Archatype, Jan 29, 2009.

  1. Archatype

    Archatype
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    Am preparing to buy a business and today they showed to me the monthly turnovers that it generates and something isn't right. They sell the lease of the business for 30k but looking at the revenue i cant help but think that something is fishy. The monthly turnover is £3.5-4.5k NET and yet they only sell the business for 30k? isn't this too little?

    Also am told that there is very little to nothing tax you pay for your income when you are self employed and own a business other than the VAT which you add to everything which isn't really a tax you pay. Is that right?

    I'll be talking to an accountant soon just wanna see what you peeps here think.

    Surely you would expect more than 30k buy out if you make 4k per month?
     
  2. kbfern

    kbfern
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    Why do you come to a av forum then for your first post ask for advice on buying a business:confused:
     
  3. Mep

    Mep
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    Turnover is the money taken before costs, not the profit.
     
  4. Archatype

    Archatype
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    Ops i did a mistake there. The amount i quoted is the profit not turnover.
     
  5. FZR400RRSP

    FZR400RRSP
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    As a rough guide, I have heard several business people tell me the rough purchase price of a company the turnover x 7.
     
  6. Archatype

    Archatype
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    is that right?
     
  7. Mep

    Mep
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    very much depends on the industry.......and the climate......i reckon more like 1.5x at present. It's usually a factor of earnings in any case.
     
    Last edited: Jan 29, 2009
  8. Archatype

    Archatype
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    1.5x the monthly turnover?? sounds way too little
     
  9. Mep

    Mep
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    no annual t/o but as I say it is usually calculated on earnings.
     
  10. oldnewbie

    oldnewbie
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    Seems to all depend on the business, Sometimes its sale price = profit and other times its sale price is 2x the profit Printing and Typesetting Businesses For Sale . You have got to take into account possible expansion possibilities and future growth potential :smashin:
     
  11. andyrj1

    andyrj1
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    Turnover is Vanity profit is Sanity.

    Value depends on lots of things

    Location - Turnover - Net Profit - Length of lease - Cost of rent.

    There is lots of things to take into account your accountant should be able to give you an idea of value.

    What sort of business is it ?
     
    Last edited: Jan 29, 2009

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