Wanna wrote:
for sale at £850,000
Wanna should have wrote:
for sale at £85,000
Fixed that for you - and by the sounds of it that's maybe being generous
Seriously, though, lots of different ways to value a business, and the suggestions here probably point to the complexity of it all, even in quite a straightforward business.
Possibly some multiple of profit, though. Eg five times annual profit, but the multiple will depend on factors like perceived risk. If Uber knocking on door, for example, multiple would be lower due to competitive threat.
Then there's the wider regulatory environment, such as the threat regarding the employment status of drivers, which Uber is finding out to its cost. That hasn't really affected the more traditional trade at this time, but who knows what the future holds.
And for small businesses that kind of valuation will depend on effort you need to expend on it. You would need more of a return if you're going to have to devote 80 hours per week to the business, as opposed to an arms-length investment where you'd just sit back and watch the money roll in.
Then there's the value of any (tangible*) assets, vehicles most obviously. If they're on their last legs (as you seem to suggest), then obviously they'd be of negligible value as regards a reasonable price for the business.
So the bottom line is (see what I did there
) that it's basically a how long is a piece of string-style of question - who knows?
An accountant would no doubt give you advice, and that might help you negotiate a lower price, but who knows if that advice might be any good?
*As opposed to *intangible* assets, the most obvious being goodwill. The goodwill will simply be what you pay for the business minus the value of the tangible assets, cars being the most obvious.
**The phrase 'bottom line' literally refers to the net profit in a profit and loss account. In everyday speech it of course normally just means the end result of something, or similar.