[Ambient Services]

i went to look at a kids clothes business it was for sale for 35k plus stock value.

now this business makes about 20k profit with a 200k turnover, there are other perks of the job like free designer kids cloths ect but my point is that is nearly double yearly profit so why do may believe our business is only worth 3x 4x monthly value???

we all need to re-evalute our business value!!!!

What type of profit is that Gross or Net?

[d.ward]

Just been reading platinums post and he valued his round at 10x the cleans.....

It makes sense that a business with a high profit margin of 60% and over should be valued at 1.5x the yearly profits...

Turnover is just turnover PROFIT is what counts and a profit margin of 60% plus shouldnt be valued at 5/6x monthly turnover.....

I know some of you dont like platinum but he has got the right ideas

[trevor povey]

Certain areas in the UK already achieve X10 their monthly turnover on domestic work ...see posts by Stan The Man on areas around Lancshire mill towns.

Our line of work may not suit everyone but as long as the work is completed to a satisfactory standard you will never have to worry about job security will have flexibility and almost certainly a higher hourly rate than the £10/15 per hour which most tradesmen can,t achieve today in these changing times

TO CONCLUDE  ITS UP TO US ALL TO UP THE ANTE AND COLLUDE TOGETHER IN PUSHING THE VALUE OF OUR ROUNDS UP CERTAINLEY UPTO A MINMUMN OF X6 OF THE MONTHLY TAKINGS.... THIS WOULD  BE AN ABSOLUTE MINIMUMN ON A ROUND THAT COULD GENERATE A DECENT HOURLEY OR DAILY TAKINGS...SO ITS EASY THE NEXT TIME WE HAVE ANY WORK TO SELL ON THE NET OR LOCAL PRESS START WITH ASKING PRICES AT X6 AS THE NEW ABSOLUTE MINIMUMN ... ITS TIME FOR CHANGE AND WE ARE THE ONES TO MAKE THE CHANGE FORZA!!! FORZA!!!  FORZA!!! YOU YOUNG SCRIMMERS
 

[ian1972]

what u got to remember about window cleaning as a business is work wise u dont own a thing,yes good will but when a round is sold some of the customers cancel just cause they liked the last guy that did them,u are hierd to do a job there are no signed contracts with your customers so no a window cleaning business is never going to be worth ridiculas amounts of money

[Sapphire Window Cleaning]

I agress with Ian, if you had all your customers on an anual contract then the business is worth more.
just having a list of names and addresses isn't worth much at all.
When you apply for a loan, you have to show proof of income, you can't say "oh but I will be having a pay rise next month"

Ronnie scenario 2 is worth more as there's more assets tied to the business.


Matt

[Sean Dyer]

Just been reading platinums post and he valued his round at 10x the cleans.....

It makes sense that a business with a high profit margin of 60% and over should be valued at 1.5x the yearly profits...

Turnover is just turnover PROFIT is what counts and a profit margin of 60% plus shouldnt be valued at 5/6x monthly turnover.....

I know some of you dont like platinum but he has got the right ideas

you stick up for platinum alot, and are always going on about him, i smell a rat lol

did your account open just after his closed lol

[d.ward]

you stick up for platinum alot, and are always going on about him, i smell a rat lol

did your account open just after his closed lol

I worked for him for a few months and ended up buying work off him. Been reading a post he started similar to this and he says the same as ronnie......

I think the problem is when it comes to selling wc see themselves as bottom of the ladder so to speak on the business ladder and just want to make around 5x cleans on the sale where if they seen a business instead of a round they would see its worth more....

Thats why having the cash to buy rounds is such a bargain so im saving up now to buy some for myself

[luther1]

I clean for a very large accounts and chat to them numerous times when i do their insides and the general rule of thumb for buying a business is 2.5 times the net profit. Turnover is erelevant. So, it sounds like a decent business prospect Ronnie.

[AuRavelling79]

I clean for a very large accounts and chat to them numerous times when i do their insides and the general rule of thumb for buying a business is 2.5 times the net profit. Turnover is erelevant. So, it sounds like a decent business prospect Ronnie.

And that'd be annual, not monthly, yes Ronnie?

[wizard]

Value can not be worked out on a monthly turnover if this was possible I would only sell after the best 3 months in my business.

[wizard]

 M b you have a very good point contracted work has good value as it is goodwill you can depend on. The problem with true value and what people are prepared to pay is that so many inexperienced buyers have little or no basic business acumen of business and would buy emotionally and often pay too much for a pound or business just to get into the trade. That does not mean you will sink but take you longer to recoup you investment

[wizard]

This is agreat posting as we have the oppertunity to flesh out the valuation riddle. Well down Ron Paton.!!!!!

[AuRavelling79]

OK - let's imagine that I am buying another round exactly like my own on the 2.5X annual profit that Ronnie mentions in the post above.

Assume that I as an owner-operator am turning over (as in gross receipts from custies) £35K. Lets say that costs and paying "somebody" (Mrs Gold)  to do the books reduces that to £25K and that the £25K is what I pay myself.

So I want to buy similar. So I need someone to do the work and he is going to cost me 20K per annum to do the work. Mrs Gold will do the books on his round thus making his accounts person redundant.

So lets say that in cold blood I am looking to make 15K profit after paying for the employee and his van etc. Out of that I want Mrs Gold to get more dosh for the extra accounts work she is doing - PAYE, NI, etc.

So lets say that to me there is 10K profit in this business I am buying. So would I pay 2.5 x  10K for it? If I felt it was solid I would.

Now - if someone offered me 25K for my round say at retirement age then would I accept?
No I wouldn't. I would reduce to 2 days a week and employ someone part time for 3 days and use the profit from him as a pension.

But if I was hacked off and moving to a new job and was offered 25K then I might accept. If I had fallen from my ladder and was crippled then I might accept too because time would be against me.

There are so many variables which is why I think there are so many variables in value.

[Ian Lancaster]

Mr and Mrs A run a corner shop.  They have an annual turnover of £250,000 on which they make £50,000 gross profit and £25,000 net profit (the money they can actually call 'theirs' after all business expenses have been paid).  They works six days a week for twelve hours a day, on Sundays they work for eight hours.  They take two weeks holiday a year but have to pay someone to run the shop while they are away.  They always work bank holidays with the only exception being Christmas day.  They have run the business for ten years and have accounts showing the steady year on year growth of 15% in net profits.

Mr B has a window cleaning round.  He has an annual turnover of £50,000 on which he makes £48,000 gross profit and £40,000 net profit.  He works four and a half days a week for seven hours Monday to Thursday and four hours on Friday, with an occasional day at weekends to catch up.  He takes two weeks holiday a year during which he simply leaves the business, having told his customers he will be late next time.  He never works bank holidays.  He has run the round for ten years and has accounts showing the steady year on year growth of 15% in net profits.

Taking into account lifestyle, the amount of time and effort needed to run the business and the profit to be gained from it, which one would you rather own?

And because of your choice, which would you say is worth the most?

If you choose the former, then you value hard work and low pay far higher than good lifestyle and high pay.  You only have one life, are you sure you should be spending it that way?

I have owned a shop, and built and sold several window cleaning businesses - I know which I value the most.

[luther1]

I agree,however,regardless of how you run your business,there is always a bottom line. Net profit. I could sit at home all day and employ two lads to clean my round,therefore making my profit less. Its a bit like saying if Richard Branson could fly a plane then he would have one less pilot to pay. We can all throw obstacles in the way,i was merely stating how any decent accountant would value any legitimate business. (not to be read as a rant,just an opinion)!

[ian1972]

if every 1 remembers platinum he was selling at 1 point 1,500 a month round for 15k not on your nelly that then dropped to 12k come on who in there right mind would buy a list of names and adresses wit no kind of fall back and see no return in the first year not mentioning the fact you will lose the odd custy,so in theory your making a loss ,its not realistic at all,no i am not putting windy cleaning down at all and dont look at myself as bottom of the ladder am happy with wat i do and have,but a round is only worth wat any1 wants to pay for it if no buyers its worth nothing except to yourself,you can advertise it at wat u want if u sell it is another thing,and going bk to platinum i bet he still got that round or he has given it away

[luther1]

A friend of mine who has just started up has just given 16k for two weeks domestic work per month

[ian1972]

good luck to him but at the end of the day any round is only worth wat someone else is willing to pay for it and 16k for a list of names adresses and goodwill is well a little steep specially wit some hard work u can build a good round at a fraction of the cost from scratch

[ftp]

A friend of mine who has just started up has just given 16k for two weeks domestic work per month

How long would it take to break even on that round at average prices - a year maybe?

[ronnie paton]

good luck to him but at the end of the day any round is only worth wat someone else is willing to pay for it and 16k for a list of names adresses and goodwill is well a little steep specially wit some hard work u can build a good round at a fraction of the cost from scratch

and what do you get from a say clothes shop?.......................even less cause you dont have regualar and reliable clients list