Fresh Threads: valuations, showrooms, stressed and struggling

  1. Ray Newman

    Ray Newman UKBF Newcomer Staff Member

    11 0
    7 |

    Hi UKBFers,

    Welcome to Fresh Threads, our weekly roundup of the best comments and advice from the forums. 

    Here are my top picks from this week.

    1. How do you value a business?

    Jane R

    I have the opportunity to buy the company I am currently working for – how can I find out the value of the business? The company has been going for many years and I wonder if that affects the price. The building is rented and it owns three vehicles.

    Mr D: Pick a number. Any number. Use that. You can look at the past few years accounts, you can go through all the figures, you can examine a load of documents but, in the end, the value is what you are willing to pay. Going for many years? So were Woolworth's and Toys R Us.

    Clinton: You examine the books carefully, and everything else, then you decide the likely cashflow in the coming years. You assess the risk to that cashflow – the higher the risk the less you pay – and your own return-on-investment (ROI) requirement. Then you decide what the business is worth to you. If you can't do all of that, the smart thing to do is hire someone to do it for you but bear in mind their analysis may lead to the advice that it's not a good investment in which case you'll have to walk away.

    The Byre: I sold my news agency in Germany to a large UK publisher. They insisted on introducing corporate structures into a hippy-dippy loose collection of funky people which annoyed everybody and most of the key people left. What's a company worth? The net equity. The rest is just whistling Dixie and holding a wet finger up to the wind.

    fisicx: How much of the current success is down to the existing boss? When they leave, how much goodwill and experience goes with them? Will current clients want to deal with you? Too many businesses rely on one or two key players.

    2. Fitting out a showroom – how much can I expect to turnover?

    Dizzybee

    I'm currently kitting out a luxury bathroom showroom and estimate that I should bring in at least £2,000 per week. Does this sound reasonable to you?

    MBE2017: The average new fitted bathroom would be £4-6,000, I think – double that for a top-end version. I think you need to revise your expectations. I used to sell for Dolphin bathrooms 25 to 30 years ago and never sold any under £3.5k for a bathroom.

    saythisinstead: Is that £2,000 gross income or the gross profit you hope to bring in? Have you done any market research to find out whether a showroom would work where you are? Will you be depending on footfall/passing trade? If you'll be bringing traffic from other sources then the location is not necessarily your biggest priority. Have you taken account of business rates, heating, lighting, upkeep, security, cleaning, fixtures and fittings, signage, advertising, and will you be able to track sales that come in because you have a showroom?

    Stedurham: Look into becoming FCA registered. Top-end bathroom shops offer finance and it's a healthy chunk of profit. I know when I looked into buying bathroom showroom, the finance gave a healthy monthly income for very little additional work.

    Chris Ashdown: Your shop will presumably only have a tiny selection of goods on show, but conveying luxury requires a large selection. Presumably your team have a unit somewhere for storage – could that also include a showroom, with lower costs and rates? I think a great website will bring in more high-end enquires that a small shop.

    3. Stressed, and struggling with marketing

    JG Devon

    I’m trying to keep things together at the moment. I’m drinking loads, not sleeping well and I’m trying to type this through tears. I started my first business in 2005 and this is the first time since the very early days I’ve felt this close to despair. In particular, I’m struggling with trade marketing. I have a sales background but getting new stockists is proving to be a problem. We only sell to gift shops and the past few years it has been almost exclusively tourist-led towns that sell our products. That should be fine until October but I will not survive another winter if it stays the same.

    Mr D: I would suggest trade shows to get in front of buyers – Exeter has one in January, there's Glee in September. The trade mags (Gifts Today and Gift Focus) often do stories on businesses. It may also be worth, for a time, putting your products online sites at Ebay, Amazon or wherever.

    MBE2017: To get fast results, maybe try a small advert in Trader magazine, where companies look for suppliers. Maybe not as easy but relatively cheap is to hit the phones – find the right contacts and have a quick chat. Done well, it should produce fast results.

    ethical PR: I am sorry you are having such a hard time. I would say one of your priorities should be to go and have a chat with your doctor. It sounds like your drinking might be rather out of control and you are stressed which is making it difficult to cope.

    4. My first company tax return – help!

    THE_SPANNER

    My first company return is due which I thought wouldn't be too difficult due to a simple structure and low transaction volume. I was wrong! Can anyone help me on how to construct the required amounts for entry into the online micro-entity submission page?

    Scalloway: You're using Pandle software to keep your books which has a balance sheet report – have you taken the figures from there? The reason I ask is that the figures you've shared show added liabilities to assets which is not what I would expect.

    Jaydee: I can see you have entered the wages owed to employees as a negative number and yet the amounts owed to HMRC and other suppliers as positive. As the negative liabilities (i.e assets) have improved your balance sheet value then I assume that positive entries in this section denote liabilities. This would mean that the (£7,480) actually means that you have overpaid your employee rather than underpaid – which would of course be odd. Maybe you need to enter £7,480 here and not (£7,480) but then there would be a circa £15k swing in your profit and loss account – so maybe the start point is to look at whether a profit figure of £23,470 makes sense.

    NicoJ: It looks to me as if the employee wages ought to be recorded as a debit which would then make your numbers balance. Maybe this should be in profit-and-loss rather than the balance sheet? I think your profit is overstated by £7,480.

    THE_SPANNER: You're both absolutely right – I have not made a net profit of £23.4k! (On sales of £24.5k I wish I had, though.) I'm such a pleb that I didn't spot this.

    That's all for this week have a great weekend!

    #0
  2. Furqan721

    Furqan721 UKBF Contributor Full Member

    55 4
    Thank You for sharing this stuff!
     
    Posted: May 16, 2018 By: Furqan721 Member since: Feb 26, 2018
    #2
    Chris The Dropshipper likes this.
  3. Salifuj

    Salifuj UKBF Newcomer Free Member

    24 1
    After all said and done, not all businesses or websites need to worry about it. Most small businesses will not be affected right?
     
    Posted: May 30, 2018 By: Salifuj Member since: Oct 7, 2016
    #5
  4. ÜZEYİR

    ÜZEYİR UKBF Newcomer Free Member

    0 0
    teşekkür ederim
     
    Posted: Jan 25, 2019 By: ÜZEYİR Member since: Jan 25, 2019
    #7
  5. Brian Preston

    Brian Preston Banned Free Member

    0 0
    this is Inflation
     
    Posted: Mar 27, 2019 By: Brian Preston Member since: Mar 26, 2019
    #8