Business Magazine Network
Valuing a small home-based business – your guesses!?
I’m interested in buying a community magazine which is 2 years old. It is a franchise & the original setup costs (and costs if the business is unsold & closes) were £250 + £125 a month, now just £25 a month ongoing fee. Profits seem to be about £4k per year and there are no business assets. There is a network of distribution points, contacts for printing etc. & booked advertising of £2k for the next 2 issues of the magazine. The owner doesn’t pay himself a wage so the profit excludes wage costs.
What would seem a fair valuation, given the above? In theory, turnover for the magazine could be £40k per annum according to the parent company but turnover has been only £12k pa so far.
This is a home-based business and I would be buying the name & the reputation – it’s a free magazine.
Any help greatly appreciated!
Be over cautious. Franchisees usually have a hard time of it whilst the franchisor takes the lions share. Remember you are tied to their products, strategies etc. Is it a good franchise. The business would only semm to be worth a nominal amount. Could you not do this outside of the franchise? What benefits is the franchisor giving? Assume you are not running the business. How much would you make as profit if you had to employ someone to run it? Don’t throw your self-employment in for nothing.
Is it a distress sale? Could you take the business on for free, or a nominal sum and then pay a percentage of your first one/two year profits?
Sorry if I sound too negative; if you think you can make a good go of it, do so. Be ruled by your head, not your heart!
Million Impossible- Entrepreneur Network Corporate Video 2009