Business Valuation?

Mr_futuristic

Looking to buy a newly established domestic cleaning business and looking to see how much you, as professionals, would value it as.

Provided:
- Website by vistaprint
- Current clients
- Details of clients whom have expressed interest in the services

Monthly Turnover: £914


Cons:
- 1.5 hours away from home
- Website is not professional (although I have my own which I would use)
- No uniforms I believe
- No contracts in place
- Newly established

motorguy

Mr_futuristic wrote: »

Looking to buy a newly established domestic cleaning business and looking to see how much you, as professionals, would value it as.

Provided:
- Website by vistaprint
- Current clients
- Details of clients whom have expressed interest in the services

Monthly Turnover: £914


Cons:
- 1.5 hours away from home
- Website is not professional (although I have my own which I would use)
- No uniforms I believe
- No contracts in place
- Newly established

Its worth £0.

Annisele

I might quite possibly value it at £0, depending on the circumstances.

For example, if it has exactly one employee who works full time. In that case, assuming a £914 per month turnover, either you're going to have to take fire the employee and take over their role yourself* (in which case you might as well get a job at minimum wage), or you're going to have to continue to pay the employee and pay to cover their holidays and sickness (in which case the business is loss-making).

*I don't know anything about TUPE, I'm just trying to make the point that - if there's a single full time member of staff - I can't see that the business is profitable.

Edit: Crossposted with pgilc1 - but seems we have the same view!

bris

There is no value to this business, newly established with no contracts, you can do that for nothing.
Please remember when buying a business you want to see an established business with a turnover and clients on their books. You would expect to see a set of accounts from either companies house or in the case of a sole trader/partnership at least some tax records to prove turn over.
There are a lot of sites set up to sell newly established businesses, the only people who will profit from them is them, don't be taken in. If you want to buy a real business look at some proper sites such as this one http://www.daltonsbusiness.com/

steve1980

Newly established = £0!

You can only really value a business once it's been trading for a minimum of 2 years but preferably 3.

Mr_futuristic

Thank you everyone for your replies. You may have potentially saved me quite a bit from this Cheers *thumbs up*

paddyrg

Looks like you may have dodged a bullet! If you want a cleaning business, all you need is to find a couple of clients who will pay for that, and you have the exact same thing as the one you were looking at. £980/month miles away sounds like a lemon, it may well be the (non-contracted) clients exist solely in the mind of the vendor, or are other companies he owns/uses just to sell startup companies to hopeful people like yourself. Sadly, wherever there is aspiration, there are people who will try to profit from that.

heretolearn_2

as the others said , £0.

Why?
Turnover is irrelevant for valuing a business, profit is what matters. You can have a low turnover and high profit (good) or high turnover and a loss or low profit (bad). Turnover on its own is meaningless.

A newly established business - you have nothing to back up any figures they give you

No clients on contract - so no reason for them to stay if you buy the business, or keep using you, or any real reason to think of them as clients at all really

'clients who are interested' - they aren't clients if they are only 'interested'. they are prospective clients. And if they really are interested why haven't they been signed up? Probably a random list of local businesses without the slightest genuine interest in the service.

You are paying for nothing - website you need to replace, no clients, no infrastructure, no actual 'business'. Were they going to supply you with a mop and hoover maybe?

Out of interest, what are they asking for?

cavework

With a £914 monthly turnover and no contracts no wonder they are selling it!
You could probably go out and get this yourself in a couple of weeks with a bit of hard work.
Don't touch it
x

Mr_futuristic

heretolearn wrote: »

as the others said , £0.

Why?
Turnover is irrelevant for valuing a business, profit is what matters. You can have a low turnover and high profit (good) or high turnover and a loss or low profit (bad). Turnover on its own is meaningless.

A newly established business - you have nothing to back up any figures they give you

No clients on contract - so no reason for them to stay if you buy the business, or keep using you, or any real reason to think of them as clients at all really

'clients who are interested' - they aren't clients if they are only 'interested'. they are prospective clients. And if they really are interested why haven't they been signed up? Probably a random list of local businesses without the slightest genuine interest in the service.

You are paying for nothing - website you need to replace, no clients, no infrastructure, no actual 'business'. Were they going to supply you with a mop and hoover maybe?

Out of interest, what are they asking for?

You're going to laugh at this, but erm...*ahem*....£5000
and when I asked them whether they just thought of the figure from the top of their head, they said they valued it as that based on other busineses which are of similar size, and then quickly reduced it to 2500

Thank god I got the advice of MSE users. Not that I was prepared to, or could afford to pay £5000 considering I've just finished uni and going into business, but thank god I got the advice of others on here.

Thanks guys :beer:

crazyguy

You could perhaps do a deal based on the running of it for a couple of years with some shares to them of a set percentage, and if does well then you can buy them out ,