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I am looking into buying a local independent business, how to I calculate the buying price?

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Blackburn & Fears Inc

Hi Candace, the respondent below is right - there is no rule of thumb. Part of the exercise regardless of price is does it make sense for you? If your took the down payment and invested at a modestly aggressive rate and got a job that pays half of what you are worth.... what would you be worth in 5 years? VS owning a company then selling it. Small businesses that sell for more than 2x ACTUAL earnings (cash in hand at the end of 12 months) get messy. Debt service and loss on investment income needs to added to the mix. If your dream is run a business that you are passionate about then that plays a critical role well-beyond money. Good luck.

Cy Fears

Apr 19, 2012
Biz Funding Group
Biz Funding Group
Business Funding Specialist
Arapahoe County, CO

Hi Candace,

There is no simple formula or rule-of-thumb for computing the value of a business. Even if two businesses have roughly equivalent cash flow, their capacity, the markets in which they operate, the competition, and numerous other factors can make all the difference in the world when it comes to value. Each enterprise must be valued as a unique entity.

If you are serious about buying a business, we have unlimited attorney support, lifetime business support, and of course our in-house credit funding program. We specialize in startup funding, no collateral or financials needed.

Apr 3, 2012

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