What is my fathers business Worth?
polishpong3 asked:
My father has owned a family Hardware store that is not doing well anymore due to the “BIG BOXES”. The store has been in the family since 1955. The road its on now is a VERY busy four lane highway that is expanding all the time. The business brokers said that the building has deprecciated a bit but should that make a difference in how it sells? Lets say the building is worth 350,000 itself. Couldnt you make alot more off it just because of location? It is located just outside of Rochester, N.Y. What do you think is the best way to get a good profit for a business like that? Thank you.
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My father has owned a family Hardware store that is not doing well anymore due to the “BIG BOXES”. The store has been in the family since 1955. The road its on now is a VERY busy four lane highway that is expanding all the time. The business brokers said that the building has deprecciated a bit but should that make a difference in how it sells? Lets say the building is worth 350,000 itself. Couldnt you make alot more off it just because of location? It is located just outside of Rochester, N.Y. What do you think is the best way to get a good profit for a business like that? Thank you.
October 26th, 2009 at 6:30 pm
You may want to contact your attorney as to the right decision to make in this situation. Herbert
October 29th, 2009 at 7:02 pm
Boy this is always tough.
If the business is loosing money with no sights of turning it around you need to bit the bullet and close it down.
Now on the upside you own some good property! How can you make money from it? Sell it? Lease it? Or do something different on your own.
Change often times offer great new options! mstrobert
October 31st, 2009 at 5:47 am
Business valuations almost always are subjective. Assuming that all the assets are in one form of business entity:
1. The value of the raw land - probably worth more to another box retailer looking to set up along the side of the highway than anyone else. Zoning conditions could greatly enhance the value of the property if you could change the zoning to something more valuable. If you don’t have a Pepsi billboard on your roof yet you should have.
2. The value of the building, minus debt. The rent on the building could sometimes be more than what your current business might net. Especially if the new tenant pays “net expenses” taxes, insurance and ALL maintenance.
3. The actual inventory of the business- generally not so much money involved here and many things will sell for way below your cost when the liquidation takes place.
4. The goodwill- this is where things get dicey. Some folks think because they been in business for a long time that their business is worth more than one that just opened. Only the case when the customers return. If they’re going down the road to Lowes, then there is no goodwilll with that customer.
Generational businesses can survive- you’ll just have to work just as hard as your dad did. For some good reading try “good to great” and built to last both books about generational businesses. Good luck in your difficult decisions slogoing@sbcglobal.net