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How much is my company worth it?

  • 27-05-2011 5:52pm
    #1
    Registered Users, Registered Users 2 Posts: 26


    Hi

    I started my cleaning company 15 month ago.In the first month i made 600€ turnover.Last month i made 43k turnover.I do my own adverising (adwords & seo),i have 16 people working full time for me,3 vans,3 websites and 40k worth of cleaning tools.By next summer i would reach 100k turnover per month.I got few schools for regular cleaning and 30 offices.I manage to get 1 extra regular job per week.Profits 30%.
    Question:After i will reach 1.2 milion turnover per year,next summer i would say,how much is my company worth it if i want to sell it and where will i try to find intrested people?

    Thanks for help


Comments

  • Moderators, Computer Games Moderators, Technology & Internet Moderators, Help & Feedback Category Moderators Posts: 25,767 CMod ✭✭✭✭Spear


    Moved from N&F.


  • Registered Users, Registered Users 2 Posts: 3,267 ✭✭✭DubTony


    :eek:


  • Registered Users, Registered Users 2 Posts: 28,696 ✭✭✭✭drunkmonkey


    Turnover = Vanity
    Profit = Sanity

    If your personal profit is 180,000pa after costs going on the 30% you mentioned, i'd think of getting in a **** hot manager and put them on a very good wage and sit back in some tax haven like bremuda making 100k a year and sipping cocktails.

    No idea what it's worth but it sounds profitable from what you said, I'd be expecing in the region of 600k to 1 million with secure contracts in place.


  • Registered Users, Registered Users 2 Posts: 5,932 ✭✭✭hinault


    alex23 wrote: »
    Hi

    I started my cleaning company 15 month ago.In the first month i made 600€ turnover.Last month i made 43k turnover.I do my own adverising (adwords & seo),i have 16 people working full time for me,3 vans,3 websites and 40k worth of cleaning tools.By next summer i would reach 100k turnover per month.I got few schools for regular cleaning and 30 offices.I manage to get 1 extra regular job per week.Profits 30%.
    Question:After i will reach 1.2 milion turnover per year,next summer i would say,how much is my company worth it if i want to sell it and where will i try to find intrested people?

    Thanks for help

    First of all, congratulations on starting and growing a company. The figures that you list are very impressive.

    In order to ascertain the value of your company one would need more information.
    Does your company have any debt such as term loans, loans owing to the directors, loans of any kind?
    In order to value your company, one would have to know how much money is currently owed to your creditors.
    Are all taxes due been paid to the Revenue? How much do you owe to your trade creditors (for supplies for example).

    put simply, you could have sales €100k per month but the amount of expenses incurred in earning €100k sales determines the level of profit (or loss) which you company enjoys.

    Ultimately what determines the value of a company is the amount the company owns/is owed, against how much it owes at a given point in time.


  • Registered Users, Registered Users 2 Posts: 1,655 ✭✭✭1966


    No idea what the company is worth but well done OH thats fair going in 15 months !!!


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  • Registered Users, Registered Users 2 Posts: 26 alex23


    Hi

    We have no debts at the moment.We bought alot of used stuff at great prices.My advantage is that i am brilliant with addwords.Big companies are to big to do jobs worth 500-1k and small companies dont have the equipment.My mine expens is google,3k per month (+- 1k).People with 200k turnover are evaluating their company as worth 2 milions.I just need an ideea about how the value is calculated.

    thank u


  • Registered Users, Registered Users 2 Posts: 26 alex23


    I do have a great manager (working like a dog) but i am intrested in retail.I only started this company to get the finance.I dont like it to much.Its a good business but not exciting enough.

    Thank u


  • Registered Users, Registered Users 2 Posts: 5,932 ✭✭✭hinault


    OK : here is a simple approach.
    You need to find out how profitable your company is.

    Here is an example.

    Sales €1m per year.

    You have costs for cleaning detergent €50k per year.
    Wages = €80k per year
    Insurance = €10k per year.
    Petrol = €12k per year.
    Advertising = €40k per year
    Light/heat cost = €10k
    Rent/rates = €10k
    Stationery = €10k
    Pension = €15k.

    Total cost = €237k (80+10+12+40+10+10+10+15)

    Profit = €863k (sales minus total cost).

    Now assuming that you have paid all of the costs above, your business is worth €863k PLUS whatever value you consider your customers to be worth.
    You might have sales worth €1m, but a buyer might be prepared to pay a bit more to purchase those customers from you. Which means that your business is worth more €863k.

    Hope this helps.


  • Registered Users, Registered Users 2 Posts: 26 alex23


    You are very good.You must be an accountant.

    Brilliant.

    Many thanks


  • Registered Users, Registered Users 2 Posts: 3,267 ✭✭✭DubTony


    I've huge respect for the OP for building a business in this economy at a growth rate of about 35% per month, but the only real "assets" are the contracts.
    OP, have you got solid contracts in place with your customers? That's what a potential buyer will be interested in more than anything else.


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  • Registered Users, Registered Users 2 Posts: 327 ✭✭userod


    I would have thought 7-8 times net profit for a return for the investor of about 12% pa (probably a little less I'm not so sure). So at €1.2m turnover and 30% profit i.e €400,000 profit a very ballpark valuation on the company would be 8*400,000 or €3.2m - provided the company's business at that point in time is seen to be sustainable.


  • Registered Users, Registered Users 2 Posts: 3,267 ✭✭✭DubTony


    hinault wrote: »
    OK : here is a simple approach.
    You need to find out how profitable your company is.

    Here is an example.

    Sales €1m per year.

    You have costs for cleaning detergent €50k per year.
    Wages = €80k per year
    Insurance = €10k per year.
    Petrol = €12k per year.
    Advertising = €40k per year
    Light/heat cost = €10k
    Rent/rates = €10k
    Stationery = €10k
    Pension = €15k.

    Total cost = €237k (80+10+12+40+10+10+10+15)

    Profit = €863k (sales minus total cost).

    Now assuming that you have paid all of the costs above, your business is worth €863k PLUS whatever value you consider your customers to be worth.
    You might have sales worth €1m, but a buyer might be prepared to pay a bit more to purchase those customers from you. Which means that your business is worth more €863k.

    Hope this helps.

    Hinault, wages sticks out like a sore thumb for me.

    16 (full time) * 39 hours * 8.65 per hour * 52 weeks is a tad over €280k a year if all 16 employees are on min. wage. This is hardly the case, but I'd be setting the wage bill at closer to, if not more than, €325K p.a. + Directors remuneration.


  • Registered Users, Registered Users 2 Posts: 327 ✭✭userod


    Sorry investor probably going to be looking for a higher return in this climate and that business so figure above is a little high. As well as that subtract €100,000 a year for managerial costs (self running) so net profit €400k-€100k=€300k and investor interested in 20% return pa so maybe closer to €1.5m. That's less than half my initial so assume I haven't a clue what I'm talking about it!! :p


  • Registered Users, Registered Users 2 Posts: 5,932 ✭✭✭hinault


    DubTony wrote: »
    Hinault, wages sticks out like a sore thumb for me.

    16 (full time) * 39 hours * 8.65 per hour * 52 weeks is a tad over €280k a year if all 16 employees are on min. wage. This is hardly the case, but I'd be setting the wage bill at closer to, if not more than, €325K p.a. + Directors remuneration.

    I wasn't basing the figures in the example on actual figures.

    I was trying to explain the methodology for trying to calculate how profitable his/her business is.


  • Registered Users, Registered Users 2 Posts: 26 alex23


    Well we have agreements with evreybody.About 50% of my turnover comes from regular work.
    The reason why we grew up so fast is that we kept the expenses very very low and we invested alot in advertising.The insurance is not 10k is only 1.5k (fbd) per year,i run my business from my house so there is not rent,we email invoices and i have 1 van servicing north dublin,one van servicing south dublin and one van servicing city center & dublin west and east.Like that i try to keep the fuel money as little as posibil.
    There is not pension in the cleaning industry and i have no corporation tax for 3 year (business started in 2010).
    The reason i have 3 website is very simple.At the start carpet cleaning was part of my original website,cleaning company,but i wasnt getting to much work,200-300 per week.Then i got a new website for carpet cleaning only (upholstery too) and people went mad,now i get 1 to 2k per week.
    I did the same thing with floor cleaning.We will see the results next week when the website is ready.
    I did my own seo and i am on the first position for 5 keywords and on the first page for hundreds of other keywords.How?Easy,i posted over 25k adds all over the planet (free adds).New starters,copy this.
    This is a great time to start any business,all the big sharks are closing down and there is alot of oportunities for young gunns.

    Thanks for help


  • Registered Users, Registered Users 2 Posts: 1,161 ✭✭✭Average-Ro


    Firstly OP, congratulations on your achievement. That's fantastic work.

    Secondly; would you consider posting your story in the "Anyone care to share their story?" sticky on top of the page? I find that the stories there always inspire me (Cormie's one always stands out!) and it would be nice to add your story to it.

    I started my own video business last January so I always like reading these success stories!


  • Closed Accounts Posts: 1,530 ✭✭✭TheInquisitor


    DubTony wrote: »
    Hinault, wages sticks out like a sore thumb for me.

    16 (full time) * 39 hours * 8.65 per hour * 52 weeks is a tad over €280k a year if all 16 employees are on min. wage. This is hardly the case, but I'd be setting the wage bill at closer to, if not more than, €325K p.a. + Directors remuneration.

    Not only that 237 from a million is 727k . not 827k. Both Completly unattainable in that profession on those sales. the majority of costs will be wages. How is he going to employ a minimum of 16 people full time on 80k? That works out as 5k each per year or 96 euro a week !?


  • Registered Users, Registered Users 2 Posts: 5,932 ✭✭✭hinault


    Not only that 237 from a million is 727k . not 827k. Both Completly unattainable in that profession on those sales. the majority of costs will be wages. How is he going to employ a minimum of 16 people full time on 80k? That works out as 5k each per year or 96 euro a week !?

    €237k costs from €1m sales = €763k profit before tax
    (I mistyped it as €863k:o).

    You missed my later reply to DubTony that the figures I supplied were done so to illustrate how the OP can estimate his firms profitability.
    Nothing more.

    The wages figure used, indeed all of the cost figures used were illustrative in my example.
    They weren't figures based on actual salaries or actual light/heat costs etc.


  • Banned (with Prison Access) Posts: 108 ✭✭Get Cracking


    This is amazing and sounds very exiting:D
    Whats your company name ?
    Can I take a look at your websites?
    Cheers :)


  • Closed Accounts Posts: 262 ✭✭coup1917


    alex23 wrote: »
    I do have a great manager (working like a dog) but i am intrested in retail.I only started this company to get the finance.I dont like it to much.Its a good business but not exciting enough.

    Thank u

    Fair play..Thats a serious 15 months. Can't wait to see the results from a business you actually have an interest in...!!....:eek:


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  • Registered Users, Registered Users 2 Posts: 2,736 ✭✭✭ssbob


    OP, I am delighted with your success however I remember last year on the UK Apprentice there was a girl Joanna who ran a successful cleaning business but wanted to get out of it because she wasn't interested in it, she believed that wasn't her business. Alan Sugar said to her " Cleaning is your business", I think you should take the same advice, you are running a very successful and profitable business, why change now? A new venture may not work for you!

    If I were you I would try to grow your existing business even moreso and if it is the case you want to diversify then use your profits from the cleaning business to help you do so.


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