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0 pointsgamechangr8y ago0 comments

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.

0 comments

nostrademons8y ago

I 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.

gamechangrOP8y ago

Agreed.

> 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.

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