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More often than not grooming businesses are
valued by the net operating income. For
example, the same business earning $100,000 a
year shows net operating income of $55,000
after deducting operating expenses. Now we get
to the variable modifier. You take the net
operating income figure and the multiply it
instead of the gross. For example, the seller
wants 2 times the net operating income, or in
this case, $110,000. Backed by nearly 20
years experience as consultants we have seen
well-established grooming businesses with
excellent goodwill and other factors sell for
2 times the net operating income. However,
when the U.S. economy is sluggish, flat or
even declining we see a distinct increase in
businesses selling for around 1 to 1.5 times
the net operating income. Remember if real
estate is included in the sale, its value is
added. We are only talking about the “business
opportunity” and not real estate included in
the sale.
Now What?
Have you considered the costs of opening
your own business? Our Startup Costs Main Menu
in the Research Center and the Outfit a
Grooming Business™ features at PetGroomer.com
are indispensible and free. You can estimate
the costs to startup and then compare to
purchasing a business. Remember, you won’t
have many customers in the beginning. The
fewer customers you have the more you need
cash reserves to account for operating losses
until you develop a steady clientele.
 As
you complete the investigation and compile
the records you are likely to gain more
insight on if the purchase of the business
is for you. Unfortunately, it has been our
experience that some pet grooming business
owners are lax in maintaining well-organized
documentation and if that is so, you are at
risk. If you cannot investigate at minimum
what has been mentioned here, and your
lawyer and accountant are likely to require
more, you may be at risk of buying a
business and inheriting undiscovered
problems. It does happen, be very careful.
Are you think about owning a grooming
business and not grooming pets? It's
important for you read the next page.
Click the
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