What value would you put on this business?

steve1980

Calum wrote: »

Hours of opening are:

Mon - Sat 0800 - 2000
Sun 0800 - 1800

I plan to manage the place myself so I would not require to pay a manager. This obviously raises the question of redundancy payments as they have been with the business for 10 years and I believe they are on a salary of £25k.

Are they allowed to open from 8 - 6?

For the manager you are looking at a redundancy figure of £4560.

They must be doing outside/event catering to warrent the figures.

stephenni1971

The overheads figure seems a bit low to me...

You confirmed


1 x Manager (salary, worked there for 10 years)
2 x Supervisors (both worked there for the last 5-6 years)
3 x Full Time Staff
There are also a number of casual/part time staff.

Manager is on £25,000

Assuming £18,000 for each supervisor ( X 2 )

Assuming £15,000 for full time staff ( X 3 )

Not including part timers that comes to £106,000.

Then you have to add employers NI which adds over 10% to that figure again.

PLUS the rent which you indicate is high, then electricity, maintenance, machinery,insurance & professional fees, waste disposal, business rates....

I think you really need to see a breakdown of ALL the costs

Calum

steve1980 wrote: »

Are they allowed to open from 8 - 6?

I assume they are as these are the opening hours, is there any reason they wouldn't be?

steve1980 wrote: »

They must be doing outside/event catering to warrant the figures.

They don't do any outside catering. They also do food (nothing hot as there is no kitchen) could this account for the high turnover? As I mentioned before it has a very high footfall.

Calum

stephenni1971 wrote: »

The overheads figure seems a bit low to me...

You confirmed


1 x Manager (salary, worked there for 10 years)
2 x Supervisors (both worked there for the last 5-6 years)
3 x Full Time Staff
There are also a number of casual/part time staff.

Manager is on £25,000

Assuming £18,000 for each supervisor ( X 2 )

Assuming £15,000 for full time staff ( X 3 )

Not including part timers that comes to £106,000.

Then you have to add employers NI which adds over 10% to that figure again.

PLUS the rent which you indicate is high, then electricity, maintenance, machinery,insurance & professional fees, waste disposal, business rates....

I think you really need to see a breakdown of ALL the costs

Here is a better breakdown of the overheads:

Rent £45k
Rates: £10k
Insurance: £4k
Heat and Light: £8k
Wages: £90.5k
Telephone: £500 - 600
Repairs: £4k
Sundries: £1k
Accounts: £5k
Cleaning £5.5k
Banking: £2.5k

This is all the costs they have broken down. Is there anything obvious missing?

Thanks for everyone's help, very much appreciated!

Premier_2

Calum wrote: »

Here is a better breakdown of the overheads:

Rent £45k
Rates: £10k
Insurance: £4k
Heat and Light: £8k
Wages: £90.5k
Telephone: £500 - 600
Repairs: £4k
Sundries: £1k
Accounts: £5k
Cleaning £5.5k
Banking: £2.5k

This is all the costs they have broken down. Is there anything obvious missing?

Thanks for everyone's help, very much appreciated!

As previously mentioned, the wages bill looks too small.

On that basis, it would bare pay the following:
3 people on minimum wage - say £12k each
2 supervisors on say £15k each
1 manager on say £18k
(plus their NICs, etc)

That would still come to more than they say & there's none left to pay the part-timers.

Also there doesn't appear to be any money for equipment, either rented or depreciated.

There's probably other things missing too - I would suggest getting it looked at professionally if you want to continue.

Edit: Just saw you said you thought the manager was on £25k? But he's the owner (sole trader?) so may not be included in salary costs ... but is taken off the bottom line. Good news would be no redundancy payment due to the owner/seller

Premier_2

Calum wrote: »

Hi,

I am thinking of making an offer on a coffee shop and was looking for advise regarding valuation. So my question is given the details below what value would you put on the business:

Turn over (Net): £362k
Cost of Sales (26.5%): £96k
Gross Profit (73.5%): £266k
Overheads: £167k
Net Profit: £99k

This is a lease hold and has 12 years left on the lease. At the moment I have not seen a balance sheet so I don't know the value of tangible assets and fixture and fittings. I know the asking price but would like to ask anyone in the know what they think is reasonable to ask for a business with these figures.

I realise that more information would be necessary for an accurate figure but a ball park would be good.

Thanks,

Calum

Calum wrote: »

Here is a better breakdown of the overheads:

Rent £45k
Rates: £10k
Insurance: £4k
Heat and Light: £8k
Wages: £90.5k
Telephone: £500 - 600
Repairs: £4k
Sundries: £1k
Accounts: £5k
Cleaning £5.5k
Banking: £2.5k

This is all the costs they have broken down. Is there anything obvious missing?

Thanks for everyone's help, very much appreciated!

Doesn't that come to £176k ?

More holes in those accounts than a swiss cheese :eek:

Calum

Premier wrote: »

Doesn't that come to £176k ?

Yes your right, there is a £9k discrepancy so the net profit would actually be £90 000.

Calum

Premier wrote: »

Edit: Just saw you said you thought the manager was on £25k? But he's the owner (sole trader?) so may not be included in salary costs ... but is taken off the bottom line. Good news would be no redundancy payment due to the owner/seller

No the manager is not the owner. So redundancy would have to be paid but on the plus side thats 25k off the wage bill.

Premier_2

Calum wrote: »

No the manager is not the owner. So redundancy would have to be paid but on the plus side thats 25k off the wage bill.

So confirming the current numbers just don't add up.

5 full time staff on minimum wage of say £12k per year plus a manager on £25k plus their NICs would come to more than £90.5k (without even including part-timers)

As the shop is open for over 80 hours per week, would you really want a minimum wage bod in charge for half that time?

Calum

Premier wrote: »

So confirming the current numbers just don't add up.

5 full time staff on minimum wage of say £12k per year plus a manager on £25k plus their NICs would come to more than £90.5k (without even including part-timers)

Yes you are right this does appear to be the case. I will look in to this, thanks for pointing it out.