How much would you sell this pool room for?

[ignomirello]

How much would you sell these pool rooms for?

or How much would you pay for a them?

# 1 lets say it earns 17K Year net expenses are 135k 4,800 sq ft

# 2 Earns 120K net a year (Don't know full expenses) 10,000 sq ft

# 1) 30 mins away

# 2) 5 mins away

Neither room has a bar. & sells very little food

 

[Rodney]

sorry read it wrong

 

[Michael-Hoang]

How much would you sell these pool rooms for?

or How much would you pay for a them?

# 1 lets say it earns 17K Year net expenses are 135k 4,800 sq ft

# 2 Earns 120K net a year (Don't know full expenses) 10,000 sq ft

# 1) 30 mins away

# 2) 5 mins away

Neither room has a bar. & sells very little food

From my persona view, #1 ===> they would have to PAY ME for me to take over.

#2 ===> if #1 net 17K on a 135K gross at half the space, I cannot imagine how #2 can yield any positive profit.

 

[ignomirello]

Thanks keep them coming

From my persona view, #1 ===> they would have to PAY ME for me to take over.

#2 ===> if #1 net 17K on a 135K gross at half the space, I cannot imagine how #2 can yield any positive profit.

Thanks keep them coming !

 

[DelaWho???]

I would have a professional come in and assess the value of the business, then I have a maximum and can know what to offer initially. Other factors that would effect my bid is location, other interested parties that I might have to competetively bid against, and the local competion for the establishment. I also would look at potential for growth.

 

[OTB]

add 30%-40% to the amount they say it made, cash gets hidden in small buisnesses...........I base value of a buisness, net income x 5 years, thats the value, $10,000 after exspences, that is just the buisness, value being $50,000+equipment/inventory, it goes up if there is property included in value...........what 1 person thinks there buisness is worth another may laugh at..........

How much would you sell these pool rooms for?

or How much would you pay for a them?

# 1 lets say it earns 17K Year net expenses are 135k 4,800 sq ft

# 2 Earns 120K net a year (Don't know full expenses) 10,000 sq ft

# 1) 30 mins away

# 2) 5 mins away

Neither room has a bar. & sells very little food

 

[matteroner]

How much would you sell these pool rooms for?

or How much would you pay for a them?

# 1 lets say it earns 17K Year net expenses are 135k 4,800 sq ft

# 2 Earns 120K net a year (Don't know full expenses) 10,000 sq ft

# 1) 30 mins away

# 2) 5 mins away

Neither room has a bar. & sells very little food

the rate of growth matters a lot. So I would get last 3 year tax returns. btw is 120k net after paying the owner for runing the business (i.e. does it include management) same for the 17k profit place....


if #2 business is in decline i.e. 200k net 150k net then 120k net ....then it may not be ask good as the other place if it that one is going from say -17k to + 17k in 6 months....

you want to buy the business that is going to grow the fastest .....that way you get a higher return on your investment.


btw, never pay for income that is not on a tax return .....that is pie in the sky money and should not factor in at all. goodwill and growth rate are going to become the majority of the value here ....so we need more numbers.

 

[ignomirello]

all you guys great info THANKS !

the rate of growth matters a lot. So I would get last 3 year tax returns. btw is 120k net after paying the owner for runing the business (i.e. does it include management) same for the 17k profit place....


if #2 business is in decline i.e. 200k net 150k net then 120k net ....then it may not be ask good as the other place if it that one is going from say -17k to + 17k in 6 months....

you want to buy the business that is going to grow the fastest .....that way you get a higher return on your investment.


btw, never pay for income that is not on a tax return .....that is pie in the sky money and should not factor in at all. goodwill and growth rate are going to become the majority of the value here ....so we need more numbers.

all you guys great info THANKS !

 

[thommy]

And also remember, while goodwill is extremely important, you cannot depreciate goodwill.

 

[michael4]

Thoughts that come to mind.
1) do these numbers assume the owner is working there or not, and taking a salary or not?
2) beware of cooked books, especially when the owner wants to sell
3) do not overpay for "good will"
4) there are certain formulas for what a business is worth, based on "rate of return". But i'm sure there are different averages for different types of bussiness.
5) evaluate each business for un-tracked costs, like the owner has his kids work there for free and doesnt include this as an expense
6) look for un-tapped revenue, like pool hall doesnt open till 1pm, but could open earlier and tap into lunch time market, etc
7) pay a knowledge person in this type of business to look over the books to point out any oddities.
8) look for things that will change in the near future, like is the lease about to go up? a new shopping mall going in across the street, etc
9) #1 looks like a bad deal, profit ratio compared to expenses is too low.

 

[Dartman]

...
Neither room has a bar. & sells very little food

So one would presume revenue is based mostly on table time?
Good luck with that. Personally I'd pass on both unless you could do something with food and drink sales.

Getting the tax returns X3 years is necessary to track what the business has done financially and to compute ratios. Additionally you would want to spend some time visiting these establishments to get a feel for the amount of traffic they get on various days and times. This would determine what sort of fuzzy you get that the customer counts actually back up the revenue figures.

A lot of good advice in the responses - take your time and don't jump blindly.

 

[ignomirello]

Thanks

So one would presume revenue is based mostly on table time?
Good luck with that. Personally I'd pass on both unless you could do something with food and drink sales.

Getting the tax returns X3 years is necessary to track what the business has done financially and to compute ratios. Additionally you would want to spend some time visiting these establishments to get a feel for the amount of traffic they get on various days and times. This would determine what sort of fuzzy you get that the customer counts actually back up the revenue figures.

A lot of good advice in the responses - take your time and don't jump blindly.

Thanks for the info !!

The 4800 sq ft pool hall just closed She wanted 60K-80K
I was willing to take it over for equipment value approx 20K
But the property owner wanted $14 square foot which the business couldn't afford.
The Buis was losing money.
The Property owner Wouldn't make the time to talk to me So we couldn't even put in an offer.

 

[Dartman]

I'm sure we all hate to see a room shut down but it presents an opportunity to acquire equipment at a bargain if the owner doesn't find cheaper space and reopen elsewhere. If it were me I'd make sure the owner has me on speed dial if they decide to sell out. As DT says, it's just business.

 

[3kushn]

I'm sure we all hate to see a room shut down but it presents an opportunity to acquire equipment at a bargain if the owner doesn't find cheaper space and reopen elsewhere. If it were me I'd make sure the owner has me on speed dial if they decide to sell out. As DT says, it's just business.

Great advice.
When a business goes out, there's no business. Meaning you need to rebuild it.

Ask yourself. Why did it go out of business? Locatinon, Management, Local Laws, Owner just wanted to retire.........

If you can address the cause, assess all of this. Like Dartman is saying you can lay low and get what you want cheap and re-locate if need be.

Remember businesses are cheap when its not a business anymore.

 

[DogsPlayingPool]

Thanks for the info !!

The 4800 sq ft pool hall just closed She wanted 60K-80K
I was willing to take it over for equipment value approx 20K
But the property owner wanted $14 square foot which the business couldn't afford.
The Buis was losing money.
The Property owner Wouldn't make the time to talk to me So we couldn't even put in an offer.

$14/sq. ft.? Where is this place, Park Ave. or Rodeo Dr.?

Seriously, there are not many areas that command that kind of rent.

 

[ignomirello]

OK I need YOUR professional opinion

Should I do this?

How much would you pay for a Pool Hall that has no chance of getting an alcohol license?

Owner sells very little food.

Seller wants $13 Sq Ft for lease rental. Lets say $65k/yr

Expenses are about 4.5 times Square footage without Payroll. Approx 23K/yr

Income is 27 x square footage *lets say 135K/yr

$135k-65k-23k = 47K
47k LEFT TO PAY EMPLOYEES & MYSELF
@$10+/HR = $21k/yr

Pros: leveraged out. Very little money in. Income can be driven up with food.

Cons: Won’t sell building. No off street Parking. (Might be a problem filling up room). Many updates needed. Baths/Software. Roof is over 25 yrs old. No chance of getting liquor license at this location.

Question is will the business make me Money or will I just be marrying a job?

 

[336Robin]

Should I do this?

How much would you pay for a Pool Hall that has no chance of getting an alcohol license?

Owner sells very little food.

Seller wants $13 Sq Ft for lease rental. Lets say $65k/yr

Expenses are about 4.5 times Square footage without Payroll. Approx 23K/yr

Income is 27 x square footage *lets say 135K/yr

$135k-65k-23k = 47K
47k LEFT TO PAY EMPLOYEES & MYSELF
@$10+/HR = $21k/yr

Pros: leveraged out. Very little money in. Income can be driven up with food.

Cons: Won’t sell building. No off street Parking. (Might be a problem filling up room). Many updates needed. Baths/Software. Roof is over 25 yrs old. No chance of getting liquor license at this location.

Question is will the business make me Money or will I just be marrying a job?

Tony,
It obvious you want a pool room. I don't think this one has any redeeming factors other than its there. No parking...no deal.

You might find a good spot somewhere else that is dead but at least has parking for cheap rent. then you could focus on bringing people there maybe. Id let this one go or buy his tables or something.

You will be marrying a nightmare in my opinion with this one. I see no ability to succeed. Once youre in...youre in...then a bigger better room might be an impossibility. Don't shoot yourself in the foot. The room is worth whatever the used stuff is worth plus nothing.

Don't pay for anything he thinks is his but belongs to someone else. His business is worth little with no parking.

Just my opinion. I went through a similar scenario. This is what it came down to with me but here there was no business.....worth

Original Construction Price- depreciation=Value

When you step in what stops the landlord from jacking up the rent?

 

[Goldy]

I would hope these rooms have a liquor license? And if they do:

Take the gross purchases, times 3 minus 20% = Sale Price.

Don't even need to see the books. Go straight to their gross purchase receipts. This rids all book cooking. And you know what the gross sales would approximately be, and obviously running a business, you'd manage your own expenses. Their expenses are irrelevant. (If they don't have copies of their purchases, then go to their beer/liquor distributor and get copies for the last year of purchases.)

Assets are worth nothing, unless of course the room is outfitted with 30 diamond tables free and clear, which I highly doubt. All other tables are worth Zero!

Hope this helps. If you are banking on Table Time, Coin/Vending to keep your business afloat, you're in the wrong business.

Zach.

A modest room with 70% owned tables, 30% Vending Tables, Liquor permit w / Sunday Liquor/Beer, $10k month operating. Is worth about 135k-170k anywhere in the country.

How much would you sell these pool rooms for?

or How much would you pay for a them?

# 1 lets say it earns 17K Year net expenses are 135k 4,800 sq ft

# 2 Earns 120K net a year (Don't know full expenses) 10,000 sq ft

# 1) 30 mins away

# 2) 5 mins away

Neither room has a bar. & sells very little food

 

[skierlawyer]

I replied in your thread in the main forum, but I'll re-iterte myself here. Do not walk away from this deal, RUN!

 

[ignomirello]

Everybody has mostly the same opinion

I replied in your thread in the main forum, but I'll re-iterte myself here. Do not walk away from this deal, RUN!

Everybody has mostly the same opinion.

Thanks everybody, keep up with your opinions & share your advice.

Thanks Again,
Tony Iggy