How to value a one owner part time business?

[4570Man]

Yes but how many jobs will pay you $55,000 a year to work 7 hours a week?

How many jobs will want you to pay them 3-7 years of your salary before you start? In that time you could have established your own gig. I’m of the option a business with no employees to continue running it and no assets is worth close to nothing. Better yet how many people that would actually be interested can fork over any substantial amount of cash?

 

[tallyho8]

Few jobs advertised on the front page of the newspaper.

But secret jobs, where you stay inside on the internet, never leave the house, the mailbox needs to be hidden from the house and secrecy is required so no one knows what you are doing and who the customers are —- well, perhaps quite a few.

But no one except a few folks getting ready to retire and sell know they exist.

MoKelly

No, the mailbox does not need to be hidden from the house. Since you are mailing your product to the customer, it is advisable to have a mailbox you can see from your home so that items are not stolen from it. It is essentially a mail order business and everyone knows how many packages ae being stolen in these times. It is easy to see why so many people are suspicious of the job because it sounds too good to be true. All businesses have trade secrets which could cost them loss of income if they became general knowledge. Does anyone know how many $100 prescription drugs (not narcotics) you can make with $5 worth of over the counter drugs purchased from the drugstore?

 

[tallyho8]

How many jobs will want you to pay them 3-7 years of your salary before you start?

Let me name a few. Doctors, lawyers etc. You must invest a few years of your future wages in order to prepare for these jobs with no guarantee that you will make it.

 

[plowhog]

There is a limited amount of sales this job can get so even though he makes about $150 an hour if would be hard to get more hours of work a day on a large scale.

This factor would dissuade many "traditional" prospective buyers.

With sales of traditional businesses (which this is not,) nearly every buyer believes (or wants to believe) they can improve and grow the business to a higher level. If they don't believe that, they look for some other business where that factor is present. It is a strong motivator if a buyer believes the business they are buying will become more successful because of their unique efforts, deeper pockets, or ... whatever.

Personally, I'd rather focus time on a difficult or failing business that has potential, compared to a "sure thing" that will never improve. Why tie yourself down to a static business such as this when better opportunities for your time can be found?

No doubt, some parties would be interested in taking over a small operation such as this, i.e. a "niche" buyer. They are more difficult to find than a traditional business buyer-- especially if you can't reveal what the business consists of.

 

[shooterdon]

No one is going to give him 3-4 times EBITDA up front based on what you have been able to share.

An earn out will not work if he is too old...which it seems he may be.

BTW, why are you not interested in buying it?

 

[scaredychicken]

It is easy to see why so many people are suspicious of the job because it sounds too good to be true.

yup

Does anyone know how many $100 prescription drugs (not narcotics) you can make with $5 worth of over the counter drugs purchased from the drugstore?

I know this is a rhetorical example - this is a concern, sounds illegal to me (because it is)


it's a NO from me
all the best as you decide next steps tallyho8

 

[mikester]

Hard to price and sell something you can't describe. And, if others can easily imitate whatever he does, that would greatly reduce what a prospective buyer would pay.

The business is worth the auction price on his business assets. In other words not very much.

If he had an internet virtual business that never earned any income and rich parents it would be worth billions.

 

[lennyzx11]

Post 12 states 365 hours a year. One hour per day.
Post 17 states 55000 per year net profit.

That works out to 150.68 per hour for instead of the 70 per hour mentioned as a wage.

Not trying to make any points. Just an observation to the conversation.

 

[Gem99ultra]

Since this is an unusual part time business it can't be valued by the usual methods found on the web and the owner is having difficulty figuring out how much to ask for it. Here are the details he is willing to share.

He works an average of one hour a day, 7 days a week. Sometimes he takes off a day which means he has to work 2 hours the next day. He takes a couple vacations each year for a week or two but has to catch up on his work immediately upon return. There are no special skills required and any high school graduate should easily be able to learn it and do it. He has run this business for 40 years with it steadily growing each year. It is run from a desk with a computer in one room of a house. You never have to leave home. everything is picked up or delivered. He usually has only about $1000 in inventory. The only reason he is selling is because he is getting too old and may have to go in a home before long. He has no one he wants to leave the business to. Items are mailed so there should be a mailbox that is in a location not visible from the home. This business could easily be run by someone who has a regular 40 hour a week job in their spare time.

After all expenses, inventory, postage, computers, web page charges, shipping supplies, etc. he makes a net profit of $55,000 a year. This is not one of those "work from home scams" that you always see advertised but a highly profitable business. Naturally, he can not give out sensitive details to just anyone or others would try to imitate him. He has never had any type of complaint with the BBB or online. There is a limited amount of sales this job can get so even though he makes about $150 an hour if would be hard to get more hours of work a day on a large scale. He is willing to train someone for a week which should be enough to learn it and he can show his tax records to prove his income.

How much do you think he should be able to ask?

I think what the guy is selling is a bottle of smoke.

If you have a true interest in his line of work, I'd only offer to buy his inventory with the understanding that he would teach you the skills needed to continue the business. Nothing more.

 

[LD1]

Far too little information to make an accurate assessment.

Off the cuff....he has little to no inventory, no patents or anything that only he can do, no tangible assets that he is trying to sell. Maybe some intellectual property in a domain name?

So dont sound like the business would be worth very much.

$55k per year is not profit. Its salary the way I understand it. Its his salary to be tied to his house constantly fulfilling orders, boxing and shipping stuff, etc.

Take out his salary and the business profit is next to nothing. Sure....it may be a good gig for someone as a job....but a valuable business it is NOT.

I agree with an earlier number of $10k max for knowledge, domain rights, and customer list, and whatever ~$1000 of inventory/supplies he has on hand.

Certainly NOT something that is 3x-7x his $55k claimed profit