Business Overview

Wages $8,000, Utilities $3,000, Credit Card $3,000, Property Taxes $1,600, Insurance $1,000, Misc. $2,000 – Diesel 220,000, Gas 30,000
Profit $75,000 before mortgage
Recent Famous Food Franchise, expected $15,000
Net Profit before mortgage, $90,000 as per seller

Financial

  • Asking Price: $6,100,000
  • Cash Flow: N/A
  • Gross Revenue: N/A
  • EBITDA: N/A
  • FF&E: N/A
  • Inventory: N/A
  • Inventory Included: N/A
  • Established: N/A

Why is the Current Owner Selling The Business?

There are all types of reasons individuals resolve to sell businesses. Nevertheless, the genuine reason vs the one they say to you may be 2 completely different things. As an example, they may claim "I have way too many various obligations" or "I am retiring". For lots of sellers, these reasons stand. However, for some, these may simply be excuses to try to hide the reality of changing demographics, increased competitors, current reduction in incomes, or an array of various other factors. This is why it is really crucial that you not count absolutely on a seller's word, but instead, make use of the vendor's solution combined with your total due diligence. This will repaint an extra practical image of the business's present scenario.

Existing Debts and Future Obligations

If the existing business is in debt, which many businesses are, then you will have reason to consider this when valuating/preparing your deal. Lots of businesses finance loans in order to cover items such as supplies, payroll, accounts payable, etc. Remember that in some cases this can mean that revenue margins are too small. Lots of companies fall into a revolving door of taking loans as a way to pay back other loans. Along with debts, there may additionally be future commitments to consider. There might be an outstanding lease on tools or the building where the business resides. The business may have existing contracts with vendors that have to be fulfilled or may cause penalties if canceled early.

Understanding the Customer Base, Competition and Area Demographics

Exactly how do operating businesses in the area draw in brand-new customers? Most times, companies have repeat customers, which form the core of their daily profits. Particular aspects such as brand-new competitors sprouting up around the location, roadway construction, and also personnel turn over can impact repeat customers as well as adversely influence future profits. One crucial thing to take into consideration is the location of the business. Is it in a very trafficked shopping center, or is it hidden from the main road? Obviously, the more individuals that see the business on a regular basis, the greater the opportunity to build a returning customer base. A last thought is the general location demographics. Is the business placed in a densely inhabited city, or is it situated on the outside border of town? Exactly how might the local typical house income impact future income prospects?