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anyone here know buisness????????????

Discussion in 'The Lounge' started by hi pinion, May 25, 2004.

  1. hi pinion

    hi pinion 3/4 ton status

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    I am considering buying a small company tommorow.I know the old man has owned it for 20+ years,and has established customers.Its a plumbing buisness.I dont know how much it is worth ,though.I dont know how to guage how much its worth.He said last year he generated 160 thou.I wont be needing the trucks,the shop,or any other physical thing he has.Just the customer base.Does anyone else here know anything about this?The guy seems deperate a little,he brought it up first.Im tring to not be to ancious acting..........How much would his customers be worth???????? Anyone know?????I could double the old mans 160(withought employees)and i think this might be a good investment.He is from the "old school" and is chrging old school prices still....and hes not up to date on all of the modern technology.Perfect chance for me to upgrade and turnout.Hmmm...anyone??? /forums/images/graemlins/thinking.gif
     
  2. bigyellowjimmy

    bigyellowjimmy 1/2 ton status

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    There isnt a cut and dried method of determining customer base value, its kinda negiotable. Im looking into a business to purchase currently and the owner wants 40% of the gross annual sales. Since you only want the customer base I'd think you should be able to get it for much less than that, although you may be better off buying the whole thing and selling off the stuff since its such a small business. Good luck /forums/images/graemlins/thumb.gif
     
  3. newyorkin

    newyorkin 1 ton status

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    I don't business, but look at records from the year before, and find out WHY he wants to sell!
     
  4. hi pinion

    hi pinion 3/4 ton status

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    What about monkey buisness??? /forums/images/graemlins/rotfl.gifj/k yep,im gonna be in that place asking for all proof of income within the last 5 yrs or so.I just dont know how much its worth.This may be the big break weve been looking for.Ive got plenty eager people waiting to go to work as well. /forums/images/graemlins/peace.gif I just dont have a clue as to how much is enough or not enough,or too much. /forums/images/graemlins/thumb.gifjake
     
  5. tecton

    tecton 1/2 ton status

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    "How much would his customers be worth"

    how many customers?
    160,000 divided by customers = each customers POTENTIAL worth
     
  6. hi pinion

    hi pinion 3/4 ton status

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    Yeah but there is an actual formula to it,i dont remember what it is though. /forums/images/graemlins/thinking.gif
     
  7. tecton

    tecton 1/2 ton status

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    [ QUOTE ]
    Yeah but there is an actual formula to it,i dont remember what it is though. /forums/images/graemlins/thinking.gif

    [/ QUOTE ]

    thats it
    you get an average of how much each person spent...graph it over a year if they are repeat customers

    you can learn ALOT from graphs
     
  8. hi pinion

    hi pinion 3/4 ton status

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    well.plumbing might be different.its sorta hit and miss,people only call if they have a problem.Chances are they werent as freqent as you would think.Mabey the 160 divided by something,i dont know.Dont know how you would graph that.Mabey go by income. /forums/images/graemlins/dunno.gif /forums/images/graemlins/thumb.gif
     
  9. Can Can

    Can Can Pusher Man Staff Member Super Moderator

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    Actually, it's really not that simple......

    When you buy a business, generally you go by last year's(or the last few years') gross income. However, inventory and assets as well as company debt and assumable liabilities come into play.

    Then there's also the intangible "goodwill" that has to be considered. A lot of small companies are worth a lot more than their gross income figures if their reputation and product development is strong.

    In your case, hi-pinion, you have to concentrate on two areas: gross income and goodwill. If the guy is willing to just sell you his "name"(and therefore his loyal customer base), you should be getting ahold of his paperwork and figuring our how much his regulars spend in a year. You should also check into whether these same customers will choose to use said company's services once they find out there's a new owner......

    If he insists that you buy out his inventory and assets(tools, trucks, office equipment, etc..), you might have to spend a few more dollars than you want.

    My best advice: Get ahold of his files and pay an accountant to look through them. You may find that he owes suppliers/creditors a lot of coin, and by taking over his business you may be liable for said debts if you're not careful. /forums/images/graemlins/deal.gif
     
  10. ChevyCaGal

    ChevyCaGal 3/4 ton status

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    You said you won't be needing the things he has like shop, trucks and such... but are those included in the price? If so, then even better. Sell what you don't need. As for the shop, rent it out to someone, make money off of it.... look at all the options you could make money from. There might be more ways then you think.
     
  11. hi pinion

    hi pinion 3/4 ton status

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    Oh damn.Yeah.for all i know, he could just let everyone know,he is leaving,hand over a new phone # to his old customers,.and leave me hanging in the wind. /forums/images/graemlins/thinking.gifNot good. I wish there was a safe way to know the calls werent going anywhere /forums/images/graemlins/thinking.gifWhat to do,what to do. Mabey make the old dude sign some legal doc. staing he is in fact retiring,i dunno. /forums/images/graemlins/dunno.gif /forums/images/graemlins/thumb.gif
     
  12. hi pinion

    hi pinion 3/4 ton status

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    na,just the base.....i already have a shop in my garadge /forums/images/graemlins/cool.gif /forums/images/graemlins/histerical.gif
     
  13. Bubba Ray Boudreaux

    Bubba Ray Boudreaux 1 ton status

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    One thing I saw you mention that nobody else pointed out, this guy is still charging old school prices. If you come in and start charging 'new school' prices, you will probably lose some of the base. Maybe not enough to hurt, but something to watch out for.
     

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