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APPRAISING A COFFEE SHOP

Our team of Business Brokers 
can assist you in an obligation 

free business appraisal. 

We provide a free, no obligation service to appraise your business. Dont worry we wont call you unless you tick the box, if you do decide you would like to sell with us we can move onto the next step

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Appraising a coffee shop

Valuing a business often confuses everyone involved, however there is a simple approach to what is generally taken into account.

You can break it down into two parts = Earning Potential & Equipment Value.

So long as you have your lease setup correctly and you can prove your financials, you can then work out what that income stream is worth.

Profit = How much money is left over at the end, after everyone else is paid.

The first step is to work out what the net profit is after rent, outgoings, wages and salaries, cost of goods, expenses, fees etc. The next step is to annualize the amount which means to find out what the profit is for a year.

This annualised profit amount is then multiplied by a magic number. This number is called the multiple and differs from business to business.  

For example

If the net profit is $100,000 per year and a buyer wants get the return on his investment back after 2 years, then the multiple will be 2 and the income valuation of the business will be about $200,000.

Coffee Shops typically have a multiplier between 1.5 and 2.5. The better the café is, the higher the multiple.

 

The longer the lease, growth opportunities, customer base, position and social media marketing results in a higher multiple.

Annual Net Profit x Multiple = Income Valuation.

Get the best price

Knowing your business and knowing what you need to have in place to get a better price for your business is very important.

Here are a few key points to help you make sure you are ready for selling your coffee shop, and for any questions that might be asked from prospective buyers.

  • Where do you fit in the market?

  • Are you in a good location?

  • Is the business reliant on the owner?

  • Where do your customers come from?

  • What systems do you have in place?

  • What are your weekly sales?

  • How much coffee do you sell a week?

  • What is your weekly profit?

  • Where do you see growth?

Equipment and stock

Valuing your Coffee Shop’s equipment and stock.

List all the equipment you have in your café and then put a value on it.

 

Valuing equipment is pretty simple, it is the purchase price minus wear and tear.

Remember to take into account what it would cost to replace the equipment.

List all the stock in your café and put a price on that, including coffee beans, drinks, dry good, etc to give a guide on how much stock value you are holding.

Appraisals, Buying or Selling, we can help

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