Help! Thinking about buying a business?

[PaulyD]

I wanted to come here for some help about this Sub shop that a friend of mine is running. The 2 partners that he is working for is selling this sub shop because they cannot get along. My question is he says there is potential in this place. They are doing about $4,000.00 a week and they just got the permits to add pizza to the place which should add more businness. He said it should run about $20,000.00 to $25,000.00 for the pizza equipment.He asked me if I was interested in buying the place and still keep him there along with myself. The rent is about $2,600.00 a month.My question is how much is this place worth if I would to buy it. They are asking $100,000.00 for it and I think that is way too much. What is a good price to buy it for. Thanks.

 

[bodegahwy]

My opinion is that you figure out how much you would make working there 40-50 hours a week as an owner. The business is worth 2-3X that amount. It does not take much to be worth 100K. Think about what it would cost to open from scratch and the figure in how long it would take to get up to the sales that already exist. Buying a business that has customers at the register and a phone that is already ringing is a good thing.

Just make sure that when you figure out the income that you are working from the tax return from last year and verify all numbers.

 

[PaulyD]

Thanks…But how much can the 2 parnters be pulling out of there. I can try to find out from my friend but my guess would be no more Than $800.00 a week. So my figures would show maybe the place is worth $80,000 to $90,000. is that about right.

 

[bodegahwy]

I would not count two partners income for valueation. If one guy running the place with sane hours could take home more than 40K I think 100K could be a good deal. The second person I would just count as an employee and the wages paid to them as expenses rather than profit since you would still need that pair of hands and would have to pay for them.

 

[lilian]

16000 a monthis it a franchise if so you will make about 4000 a month if it is not a franchise you will make about 4800 you if you work at least 60 hours , i wont pay more than 50000 and that will be max

 

[PaulyD]

It’s Not a franchise That’s what I am thinking about, $50,000.00 for the business. At $4,000.00 aweek in Gross revneue Mabe they can take 20% for themselves if That much. That’s where I am getting the $800.00 from