Calling all ‘Powerfully Built Company Directors’
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Well if the rumours are to be believed, PH is almost entirely frequented by such people and i have a question which i hope some will be able to help me with.
There’s a business nearby for sale, it’s a business which i would be able to run in terms of the working on the hands on side of it but i’d imagine the accounts etc would take a bit of learning.
Currently owned by a husband and wife team and three members of staff.
Husband does the hands on stuff which i would be doing and wide runs the office with the other staff.
I don’t have profit figures as i haven’t viewed but turnover is slightly over £500k and asking price is £175k ONO.
Premises are rented at just under £20k PA and they intend to include a couple of work vehicles in the sale.
I’m mid 30’s and know if i want to get anywhere i need to not be working for someone else.
I was always going to be a millionaire before i was 30 so i didn’t put much thought in to what i really wanted to do and nothing has come to me yet so i think i’m going to be one of those people who just has to try something before i end up a bitter and twisted middle aged man working for a national company and making myself sick with disgust for being a loser.
Anyway, we have perhaps 20% equity in our house (only £40/50k) so won’t be able to pull much (if any) out of it but i’m sure the bank would want it put up as security anyway.
I am interested in knowing who to speak to and how to find out business loans (and the cost of) and then working out whether there is the profit in the business to support the repayments on the level of borrowing which would be required to purchase.
I’m sure the majority of that is drivel but hopefully i’ve managed to convey what it is i’m looking at, what i’m wanting to do, and then asking how i’m going to do it!
Or alternatively, feel free to respond saying i should stick in at my current job and trade and work for someone else for the rest of my life if that’s the best thing to do.
Thanks in advance, RUI.
There’s a business nearby for sale, it’s a business which i would be able to run in terms of the working on the hands on side of it but i’d imagine the accounts etc would take a bit of learning.
Currently owned by a husband and wife team and three members of staff.
Husband does the hands on stuff which i would be doing and wide runs the office with the other staff.
I don’t have profit figures as i haven’t viewed but turnover is slightly over £500k and asking price is £175k ONO.
Premises are rented at just under £20k PA and they intend to include a couple of work vehicles in the sale.
I’m mid 30’s and know if i want to get anywhere i need to not be working for someone else.
I was always going to be a millionaire before i was 30 so i didn’t put much thought in to what i really wanted to do and nothing has come to me yet so i think i’m going to be one of those people who just has to try something before i end up a bitter and twisted middle aged man working for a national company and making myself sick with disgust for being a loser.
Anyway, we have perhaps 20% equity in our house (only £40/50k) so won’t be able to pull much (if any) out of it but i’m sure the bank would want it put up as security anyway.
I am interested in knowing who to speak to and how to find out business loans (and the cost of) and then working out whether there is the profit in the business to support the repayments on the level of borrowing which would be required to purchase.
I’m sure the majority of that is drivel but hopefully i’ve managed to convey what it is i’m looking at, what i’m wanting to do, and then asking how i’m going to do it!
Or alternatively, feel free to respond saying i should stick in at my current job and trade and work for someone else for the rest of my life if that’s the best thing to do.
Thanks in advance, RUI.
You have to be very clear of what (if any) benefits you are getting by purchasing a going concern instead of just setting the same type of business yourself.
It’s tempting to think you are buying a business you can step straight into running and taking a profit. The reality is that you are also likely buying a lot of liability. Staff is the major obligation but there will be other contracts too.
The due diligence is no small matter and done properly will be expensive.
Sorry to be a bit negative but unless it’s a very simple setup or it’s a sensible price, all in, it may be better to start from scratch.
It’s tempting to think you are buying a business you can step straight into running and taking a profit. The reality is that you are also likely buying a lot of liability. Staff is the major obligation but there will be other contracts too.
The due diligence is no small matter and done properly will be expensive.
Sorry to be a bit negative but unless it’s a very simple setup or it’s a sensible price, all in, it may be better to start from scratch.
Couple of possible red flags here.
Why are they selling?
Husband and Wife team; if you buy it, they're both gone so you'd be doing the role of two people.
Do you know the business (as in the sector)? You say you can do the hands on bit but you also need to be running a business. Could you do both?
A £175k asking price would suggest an annual profit of something in the region of £30k. On a £500k, that seems a little lean but depends on what the remaining £470k is used for. You need to look at their accounts.
And are you attracted to this because it's a business that's for sale and you fancy being the boss, or do you have a vision for what the business could be under your leadership? If the former, do you have a plan of how that vision will be achieved?
Assuming all's good, raising £175k is a big ask. You'll not get it all. You'll almost certainly have to put your house up as a guarantee. You could negotiate a deal whereby you pay the current owners half now and play the balance over, say, five years. But would they be up for this?
So, before you speak to anyone or spend any money, have a look at their accounts over the past five or is years. Check out the owners at Companies House, speak to the staff and after that, consider if you still think it a viable opportunity.
Why are they selling?
Husband and Wife team; if you buy it, they're both gone so you'd be doing the role of two people.
Do you know the business (as in the sector)? You say you can do the hands on bit but you also need to be running a business. Could you do both?
A £175k asking price would suggest an annual profit of something in the region of £30k. On a £500k, that seems a little lean but depends on what the remaining £470k is used for. You need to look at their accounts.
And are you attracted to this because it's a business that's for sale and you fancy being the boss, or do you have a vision for what the business could be under your leadership? If the former, do you have a plan of how that vision will be achieved?
Assuming all's good, raising £175k is a big ask. You'll not get it all. You'll almost certainly have to put your house up as a guarantee. You could negotiate a deal whereby you pay the current owners half now and play the balance over, say, five years. But would they be up for this?
So, before you speak to anyone or spend any money, have a look at their accounts over the past five or is years. Check out the owners at Companies House, speak to the staff and after that, consider if you still think it a viable opportunity.
Makes sure the H&W aren’t the business otherwise it will fall apart when they leave.
Also make sure you aren’t buying a job so to speak. Imo there needs to be a very decent return after market rate salaries.
The guy I use you don’t need any PG, the rate is very good but you do need to put some skin in the game although not necessarily a deposit.
Also make sure you aren’t buying a job so to speak. Imo there needs to be a very decent return after market rate salaries.
The guy I use you don’t need any PG, the rate is very good but you do need to put some skin in the game although not necessarily a deposit.
Edited by Puzzles on Saturday 5th August 22:46
My first question is what are you actually buying? A product design? A brand with some credibility in the market? What are the barriers to doing it yourself? If you know they are on The way out could be a gap in the market to fill.
Which leads on to what the chap above suggested. Be sure that the previous owners aren’t the business.
I don’t want to sound egotistical but if sold my company, the new owner would quickly realise that I am the R&D, sales, marketing and purchasing department. My company would be quite limited without me. Which is often the nature of small businesses.
Which leads on to what the chap above suggested. Be sure that the previous owners aren’t the business.
I don’t want to sound egotistical but if sold my company, the new owner would quickly realise that I am the R&D, sales, marketing and purchasing department. My company would be quite limited without me. Which is often the nature of small businesses.
StevieBee said:
Couple of possible red flags here.
Why are they selling?
Husband and Wife team; if you buy it, they're both gone so you'd be doing the role of two people.
Do you know the business (as in the sector)? You say you can do the hands on bit but you also need to be running a business. Could you do both?
A £175k asking price would suggest an annual profit of something in the region of £30k. On a £500k, that seems a little lean but depends on what the remaining £470k is used for. You need to look at their accounts.
And are you attracted to this because it's a business that's for sale and you fancy being the boss, or do you have a vision for what the business could be under your leadership? If the former, do you have a plan of how that vision will be achieved?
Assuming all's good, raising £175k is a big ask. You'll not get it all. You'll almost certainly have to put your house up as a guarantee. You could negotiate a deal whereby you pay the current owners half now and play the balance over, say, five years. But would they be up for this?
So, before you speak to anyone or spend any money, have a look at their accounts over the past five or is years. Check out the owners at Companies House, speak to the staff and after that, consider if you still think it a viable opportunity.
Everything Steve has said ^^ .Why are they selling?
Husband and Wife team; if you buy it, they're both gone so you'd be doing the role of two people.
Do you know the business (as in the sector)? You say you can do the hands on bit but you also need to be running a business. Could you do both?
A £175k asking price would suggest an annual profit of something in the region of £30k. On a £500k, that seems a little lean but depends on what the remaining £470k is used for. You need to look at their accounts.
And are you attracted to this because it's a business that's for sale and you fancy being the boss, or do you have a vision for what the business could be under your leadership? If the former, do you have a plan of how that vision will be achieved?
Assuming all's good, raising £175k is a big ask. You'll not get it all. You'll almost certainly have to put your house up as a guarantee. You could negotiate a deal whereby you pay the current owners half now and play the balance over, say, five years. But would they be up for this?
So, before you speak to anyone or spend any money, have a look at their accounts over the past five or is years. Check out the owners at Companies House, speak to the staff and after that, consider if you still think it a viable opportunity.
The biggest one for me being : why are they selling? There's usually a red flag somewhere if the business appears to be profitable on paper.
Also, what is the business? Remember that a lot of businesses have got to the size they are because of the owner(s), their reputation, quality of work etc. Once they are removed from the equation, loyal customers no longer have any reason to stick with you and use this transition period to seek a better price elsewhere. Don't assume that because they are doing £500k turnover you'll be doing the same under your ownership.
Check for any upcoming regulatory changes that may be in the pipes as this is often a reason for businesses to sell up, as they know that (for example) in a few years they'll need to invest ££££££ to meet new government regulations.
Saying what type of business it is and whether it's service/manufacturing would enable people to give you much more useless answers .
A quick response; thanks to all for posting and taking the time.
This is the business -
https://www.rightbiz.co.uk/buy_business/for_sale/2...
I’ll read through all responses again and respond more thoroughly later today.
Thanks again.
This is the business -
https://www.rightbiz.co.uk/buy_business/for_sale/2...
I’ll read through all responses again and respond more thoroughly later today.
Thanks again.
RUI488 said:
A quick response; thanks to all for posting and taking the time.
This is the business -
https://www.rightbiz.co.uk/buy_business/for_sale/2...
I’ll read through all responses again and respond more thoroughly later today.
Thanks again.
Time to get the accounts for the last 3/5 years (look pre covid), obtain some vat records too, obtain the use of an accountant who can guide you through the process, and structure the right way to purchase for you.This is the business -
https://www.rightbiz.co.uk/buy_business/for_sale/2...
I’ll read through all responses again and respond more thoroughly later today.
Thanks again.
Have a friend in the plant hire/repair business, does very well in a two person business.
KIV you'll need to pay for the stock on top of the agreed price, and you'll need some w/cap and sufficient background to maintain any ongoing trade accounts with the suppliers.
Good luck.
RUI488 said:
A quick response; thanks to all for posting and taking the time.
This is the business -
https://www.rightbiz.co.uk/buy_business/for_sale/2...
I’ll read through all responses again and respond more thoroughly later today.
Thanks again.
Useful infoThis is the business -
https://www.rightbiz.co.uk/buy_business/for_sale/2...
I’ll read through all responses again and respond more thoroughly later today.
Thanks again.
Selling because they are retiring (always a good sign)
£500k TO on retail, net profit after employee costs, rent, rates, utilities, mkting etc likely to be 10%, service and hire should be higher, so useful to get the split of TO across these 3.
It says £175k plus stock at value (could be tens of thousands of pounds of stock to pay for day 1).
Business has grown over the past few years (worth checking this was not just covid bounce, or artificially high margins due to shortages)
My gardening spend went up 300% during covid so as mentioned look back further at revenue and profit margins. Margins may have changed quite a bit over last couple of years, not all businesses adjusted well to inflation. Also check the leasehold rent terms.
Personally I am risk averse these days regarding valuations and would have to have a compelling reason to pay more than 2-3x net profits unless there was clear growth baked in. I would also adjust profit based on estimated salary for the 2 person management team. Do you actually want their jobs? Is it worth taking a job in a similar shop to see if you actually want this day in day out?
It may be that you could start this on your own for less money. And you might effectively end up having to do it yourself, if staff leave etc.
Personally I am risk averse these days regarding valuations and would have to have a compelling reason to pay more than 2-3x net profits unless there was clear growth baked in. I would also adjust profit based on estimated salary for the 2 person management team. Do you actually want their jobs? Is it worth taking a job in a similar shop to see if you actually want this day in day out?
It may be that you could start this on your own for less money. And you might effectively end up having to do it yourself, if staff leave etc.
Edited by lizardbrain on Sunday 6th August 08:10
Wilmslowboy said:
Useful info
Selling because they are retiring (always a good sign)
£500k TO on retail, net profit after employee costs, rent, rates, utilities, mkting etc likely to be 10%, service and hire should be higher, so useful to get the split of TO across these 3.
It says £175k plus stock at value (could be tens of thousands of pounds of stock to pay for day 1).
Business has grown over the past few years (worth checking this was not just covid bounce, or artificially high margins due to shortages)
Wow 175k is a lot then for good will. Selling because they are retiring (always a good sign)
£500k TO on retail, net profit after employee costs, rent, rates, utilities, mkting etc likely to be 10%, service and hire should be higher, so useful to get the split of TO across these 3.
It says £175k plus stock at value (could be tens of thousands of pounds of stock to pay for day 1).
Business has grown over the past few years (worth checking this was not just covid bounce, or artificially high margins due to shortages)
I'm quite cynical when it comes to businesses like this I would look at the stock value and add 10% for the good will. If they are wanting to retire and aren't just closing that means none of the staff want it but they don't want the staff out of a job. Given that the lease is a liability and laying of staff could be a liability I think 175k is an absolute liberty to be asking!
lizardbrain said:
Personally I am risk averse these days regarding valuations and would have to have a compelling reason to pay more than 2-3x net profits unless there was clear growth baked in.
I would also adjust profit based on estimated salary for the 2 person management team. Do you actually want their jobs? Is it worth taking a job in a similar shop to see if you actually want this day in day out?
I got approached a few months ago by a business owner wanting to sell as she wanted to retire. I would also adjust profit based on estimated salary for the 2 person management team. Do you actually want their jobs? Is it worth taking a job in a similar shop to see if you actually want this day in day out?
Edited by lizardbrain on Sunday 6th August 08:10
From memory the stats were aprx
250k turnover
80k profit
She wanted x3 the profit figure but that profit figure didn’t include the cost to replace her, which after the salary, NI, pension and so on would mean you’d be doing well to break even.
She wanted 240k for that.
Couple of things to look at:
Firstly, do they have geographic protection for STIHL and Husqvarna products. Are they the only retailers in the Dumfries and Galloway area? If they are or they have a decent protected footprint, then this is good because it gives you a protected market. This assumes there is sufficient, regular demand in that area so important to consider this.
Next is Distributorship for STIHL and Husqvarna products. Find out who they are, go and speak to them and get a feel for how they operate. It's they that you'll need to negotiate the stock price with. It's also important to establish that there'll be no issue you taking over the retail licence to sell the products - establish the conditions around that going forward.
Based on the profile, it looks to be a nice little enterprise.... but I think you'll bore quickly with it, even if it's successful. It's the sort of business I see someone who's been a gardener or landscaper for the past 30 years with a paid-off mortgage buying as a more gentle means to top up the pension.
Firstly, do they have geographic protection for STIHL and Husqvarna products. Are they the only retailers in the Dumfries and Galloway area? If they are or they have a decent protected footprint, then this is good because it gives you a protected market. This assumes there is sufficient, regular demand in that area so important to consider this.
Next is Distributorship for STIHL and Husqvarna products. Find out who they are, go and speak to them and get a feel for how they operate. It's they that you'll need to negotiate the stock price with. It's also important to establish that there'll be no issue you taking over the retail licence to sell the products - establish the conditions around that going forward.
Based on the profile, it looks to be a nice little enterprise.... but I think you'll bore quickly with it, even if it's successful. It's the sort of business I see someone who's been a gardener or landscaper for the past 30 years with a paid-off mortgage buying as a more gentle means to top up the pension.
Edited by StevieBee on Sunday 6th August 09:29
Many lifelong self employed business people reach retirement time, then find they cannot sell their lifes wirk for very much at all.
The garden machinery couple say they have run that business for about 15 years.
£175,000 capital alone, would not provide for a very comfortable retirement.
The worst types of businesses are probably those, where anyone with the appropriate knowledge, could start themselves anyway.
Many reasons why this isn’t worth the risk and hassle but a few that are positive.
Lynda’s linked in is telling, saying it’s “challenging” and learnt a lot etc - she also doesn’t look that old.
I think they are getting out after 15 years for the same reason the original owners did - big slump ahead.
What’s the protection on the major brands? We would push Stihl, Husky etc to higher sales I’m sure. Could the webby do more?
Negatives - stock value, I bet they have a few grand of dusty s
t they’ll include in the value
Lynda’s linked in is telling, saying it’s “challenging” and learnt a lot etc - she also doesn’t look that old.
I think they are getting out after 15 years for the same reason the original owners did - big slump ahead.
What’s the protection on the major brands? We would push Stihl, Husky etc to higher sales I’m sure. Could the webby do more?
Negatives - stock value, I bet they have a few grand of dusty s
t they’ll include in the value Edited by DSLiverpool on Sunday 6th August 09:55
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