Business analysis

[Angel11]

Hi

I am a new member. Been lurking for a while and found really great info here.

I am considering a business that is for sale that has the following numbers. I believe they are pretty good (if accurate,naturally), but I am no expert in this field, so I hope you can give me some input.

Here it goes.

Asking price: $374,000
Revenue :$666,000
Cost of goods: $206,000
Gross Sales: $ 459,000
Total Expenses:$324,000
Cash Flow: $135,000

Been in business for 4 years
#Employees: 11PT /5FT
size:1500 sqft

Thanks in advance for any help you can give me. I just want to get a general idea if its a good deal or not.

Angela

 

[Fresh Roaster]

And revenue is greater than gross sales because...?

 

[ElPugDiablo]

Hi

I am a new member. Been lurking for a while and found really great info here.

I am considering a business that is for sale that has the following numbers. I believe they are pretty good (if accurate,naturally), but I am no expert in this field, so I hope you can give me some input.

Here it goes.

Asking price: $374,000
Revenue :$666,000
Cost of goods: $206,000
Gross Sales: $ 459,000 Shouldn't this be Gross Margin?
Total Expenses:$324,000
Cash Flow: $135,000

Been in business for 4 years
#Employees: 11PT /5FT
size:1500 sqft

Thanks in advance for any help you can give me. I just want to get a general idea if its a good deal or not.

Angela

If you can verify the number then I think it is worth further investigation. Ideally the numbers are all reflected in tax returns. You will need to have numbers for all 4 years. Pay attention to year over year revenues. If year 3 is greater than year 4, then you need to know why. Also pay attention to the change in COGS and in total expenses as a percentage of revenue.

You also need a copy of their lease. Hopefully you can assume the lease, and the term is fair and still have enough years left on it so you don't get a big rent hike. You need to know why the current owner is selling. You also need to know local business climate and if a new competitor is setting up shop nearby.

 

[Angel11]

yep sorry

Asking price: $374,000
Sales :$666,000
Cost of goods: $206,000
Gross Profit: $ 459,000
Total Expenses:$324,000
Cash Flow: $135,000

 

[Angel11]

Thank you for the info. :grin:

 

[crema123]

Just to spare you some grief in the long term, you say "your no expert".

Before you get into this you need to become an expert, or you will not succeed. Sorry for the bluntness.

Do as much homework as you possibly can. Understnad the business, stalk it, hang out outside and count customers, hang out inside and tally sales. Spend weeks doing this. Spend weeks understanding every item on their financial statements. Become an expert in their business, and as far as I'm concerned you should wind up knowing more about their business than they do. Then you will be ready, and you will be an expert.

Good luck!