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Old 10-30-2015, 06:44 AM   #21
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Ice cream shoppe/marijuana dispensary... Good way to attract extra customers, and create a "buzz".
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Old 10-30-2015, 07:23 AM   #22
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Food & Beverage Industry Snapshot - Spring 2015 | Stout Risius Ross

A multiple of about 8 to 9 time EBITDA would be what retail food service businesses go for which would make this about a $112,000 to $126,000 business
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Old 10-30-2015, 08:05 AM   #23
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$325k is entirely too much money to buy a job!
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Old 10-30-2015, 08:09 AM   #24
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Originally Posted by Texas Proud View Post
As others have said, price is WAY too high...

Frayne, it is more like 5X profit or as someone else mentioned 1 to 1.5X sales unless there is something else that has value... and ice cream store does not. ...
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... In addition like others said, you need multiple years revenue and a recent balance sheet.

A few other observations:
* Do salaries include owner salary? ...
Right, some multiple of profit, not sales. While I hear sales multiples thrown around in terms of valuing a business, I think those are just after-the-fact averages. I don't see how sales alone can tell you anything about value. Sales in a declining market, and/or sales with little/no profit are not worth much, may even be a liability.

Yep, multiple years records, tax forms, etc are needed to paint a picture and a trend. Lots of negatives have been pointed out, I don't see how this can make sense at all, and I'd be even more worried that some unexpected cost (repair, lawsuit, etc), could wipe out all the sales, let alone profit.

This seems far riskier, and far more work, than putting the money in an index fund. Would you put $325K into a single stock? I wouldn't, and I wouldn't recommend it, unless you want tp 'play' a little, and $325K represents less than 5% of your liquidity.

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Old 10-30-2015, 08:11 AM   #25
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You should figure out what the tangibles are worth. Equipment (used), building, land, signs (if you keep the name), and other hardware.

Then, you know what the business is actually selling for. If there is $300K in real estate that goes with it, maybe the price is right.

Your post says $100K in land, $165K in business. Why the $325K? Why not $265K
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Old 10-30-2015, 09:08 AM   #26
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My dad owned a deli in nyc, I know the way it works here on selling small businesses, add up the stock, equipment ,building the add up to FIVE times the profit and that's the maximum I would pay. Otherwise open your own from scratch
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Old 10-30-2015, 09:30 AM   #27
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Unless you have experience in the business and know how to expand it or make it much more profitable.. it's really not worth it.

My experience is with online businesses, and many of those sell for only 3x annual profit... and generally have very low overhead.

If it could sell mine for even 5x I'd do it in a heartbeat.
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Old 10-30-2015, 09:43 AM   #28
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Why do you want to buy it? Maybe not the best investment but maybe there are other factors.

Why does the owner want to sell it?
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Old 10-30-2015, 10:00 AM   #29
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Why do you want to buy it? ......
Free ice cream?
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Old 10-30-2015, 10:19 AM   #30
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What about a banana stand?
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Old 10-30-2015, 10:47 AM   #31
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Some of these answers are sarcastic and not helpful to his question
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Old 10-30-2015, 10:49 AM   #32
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Welcome to our world. You're obviously new here. We are a pretty sarcastic bunch.
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Old 10-30-2015, 10:59 AM   #33
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I was being serious. There is always money in the banana stand.
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Old 10-30-2015, 11:06 AM   #34
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Old 10-30-2015, 11:26 AM   #35
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I don't see how sales alone can tell you anything about value.
It can be helpful if you have lots of comparable businesses that sold earlier.

Gives you a quick ballpark of what the markets is like, and what it should (or could after profit improvement) be worth.
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Old 10-30-2015, 12:43 PM   #36
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There is always money in the banana stand.
Yea, a whole bunch.
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Old 10-30-2015, 12:44 PM   #37
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Yea, a whole bunch.
And not much appeal...
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Old 10-30-2015, 01:05 PM   #38
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Originally Posted by ERD50 View Post
Right, some multiple of profit, not sales. While I hear sales multiples thrown around in terms of valuing a business, I think those are just after-the-fact averages. I don't see how sales alone can tell you anything about value. Sales in a declining market, and/or sales with little/no profit are not worth much, may even be a liability.

Yep, multiple years records, tax forms, etc are needed to paint a picture and a trend. Lots of negatives have been pointed out, I don't see how this can make sense at all, and I'd be even more worried that some unexpected cost (repair, lawsuit, etc), could wipe out all the sales, let alone profit.

This seems far riskier, and far more work, than putting the money in an index fund. Would you put $325K into a single stock? I wouldn't, and I wouldn't recommend it, unless you want tp 'play' a little, and $325K represents less than 5% of your liquidity.

-ERD50

The ratio to sales is just another number.... you compare it to other valuation numbers and see if it is way off or not... as you point out, it might not mean anything... the last temp job I had was with a company that had sales go from $15 mill down to $5 mill.... went from a profit to a loss... when the owner was told that his business was worth less than $1 mill he could not believe it... AFAIK, he still owns it.... (BTW, the value was in the equipment and software, not the revenue or lack of income)....
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Old 10-30-2015, 01:18 PM   #39
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I was being serious. There is always money in the banana stand.
Another Arrested Development fan!
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Old 11-03-2015, 06:11 PM   #40
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There is a ice cream business for sale in the old city I use to live in. What do you all think of the attached P&L (2014) and current valuation? The business is being sold for 325k. They only accept cash and are open 6 months a year.

I have a few thoughts to share
, but wanted to get your opinions!
So now that you've gotten some feedback, what were your thoughts on this?
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