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Looking at buying a Bon Appetit Pastry route does anybody have some advice.

Any advice appreciated. Seems like full-time effort results in ~$60k net income. Is that accurate?

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United Financial LLC
Experts in Small Business Valuations
Alameda County, CA

That may well be the case that ~$60k is the owner's benefit or Cash Flow from the business. While I am not familiar with that particular business, there are some general guidelines that hold true across nearly all small businesses (under $1 Mil in value). First, look at top line revenue for the route. The owner can usually make between 10% to 20% of the gross revenue, so for $60K the gross annual sales need to be $300k to $600K. If that's the case, then it's likely a decent deal. Another way to look at it is in terms of the price of the business ... which is usually expressed as 2 to 3 times Cash Flow - in your case $120k to $180k for price of the business. That means if you paid somewhere in that price range, your Return on Investment (ROI) with $60k is 33.3% to 50% ($60k/$120k = 50%).

Whether your particular opportunity is closer to 2X or 3X depends on a number of factors called "value drivers" ... such as number of accounts, management requirements, location, etc. That's a reason to invest in a business evaluation; especially if it's the difference between paying $120k or $180k (or some other number) for the opportunity to make $60k per year. I hope this all makes sense.

Mar 31, 2016

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