Selling a bakery business is an important decision that some owners might be considering as the economy situation is not facing its best moment.
Once you have decided to sell your bakery, you have to follow a few steps in order to value your business assets, your employees and also your possible tax issues. And before setting your sale price, make sure it matches with the market’s expectations.
But why would anyone sell a bakery? What could be wrong with such safe business? Usually, owners who have decided to sell their bakeries complain at the high expenditures involved with the business administration, especially when country’s economy situation is not that good. But sometimes they only want to retire.
Take a look at the following topics and learn how to sell your bakery business for the best price.
What is your Bakery business worth?
In order to discover what your bakery business is worth you have to do at least two things: first, gather all finance information from the past years. Focus on the last three to five years, if possible. Than, compile it into a major and complete report. Your potential buyers will probably ask for finance data that justified the investment they are planning to do.
And as bakeries are a particular popular business in the United States, as it is all over the world, competition can be a problem as well. Potential buyers are aware of that, for sure, so you must include in the same report how competition may be harming your business.
- What are the sales?
- What is the profit?
- What are the growth trends?
- What is driving new sales and is that sustainable?
- What channels do new customers come from and what is the breakdown of each channel?
- What is your market position?
- Is your Location favorable?
- How reliant is the business on the owner?
- What systems and processes are in place to run the business?
What makes a Bakery business worth more?
There are some aspects that may improve your bakery business valuation and make it worth even more. So it’s essential you don’t set your asking price before knowing exactly which characteristics from your business can be considered valuable.
Don’t get lost, check out these metrics:
- Predictable key drivers of new sales
- Stable or growing traffic from diversified sources
- Established suppliers of inventory with backup suppliers in place
- Traffic stats
- High percentage of repeat visitors and repeat sales
- Clean legal history
- Brand with trademark, copyright or legal concerns
- Documented systems and processes
- Growth potential
What does the average Bakery business sell for?
Since 2005, there have been 97 bakery sales in the United States. The average multiple of the same period was 2.4 and average sales price was over $207k.
These numbers show bakeries usually are small business, as it’s average sale price is not that big compared to other business market in the US. Profit is not that great either, but it’s good enough.
What is the most frequent deal size?
However, in the past ten years, there have been some bigger bakeries sold, as average sales price is four times higher than the most frequent deal size: $50k.
It means that most of bakery negotiations closed at $50k, but there have been some higher deals, as you can see in the chart.
Is the Bakery market getting bigger?
There were no bakery sales in 2015, so the most recent data is from 2014. That year, bakery business were valued at more than $4 million, a much higher amount than previous years.
There has been only one year that was (almost) as good as 2014, and this year was 2007, when total transaction value was also higher than $4 million.
Are bigger businesses worth more?
Not always, but the general rule is that the higher the deal size the higher the multiple rate, as you can confirm by looking at the chart.
Bigger businesses were negotiated for higher deals sizes and got a better multiple (profit) than smaller businesses.
What states have the most Bakery business deals?
California and Florida, the biggest states in the US, had the most bakery business deals in the past ten years. But New York, New Jersey and Connecticut had good results as well.
However, sometimes you can overcome the low number of deals with investors or competitors looking to enter a specific new area, and get lucky with an offer!
Why would you sell in the first place?
The reason to sell always varies from each person. Maybe you are looking for new challenges, businesses and opportunities, or you just want to enjoy your family and retire. Although it can seem tempting to get your hard worked cash, make sure that you are clear on the motives so you don’t regret afterwards.
How long will it take to sell your business?
If you have read all the necessary steps to understand your valuation, and think you have focused on all the topics that make your company worth more, it is maybe time to start the process. Selling your business is a long-term process, and doesn’t happen overnight. Usually companies sell in 12 months, but you can also see deals getting closed in 6 to 9 months depending on the opportunity.
What is the process of selling your business?
This step by step process will help you get less confused when you make sure you are ready and confident to let go of your business, and perform a nice and positive sell. Many entrepreneurs forget about a step, or just don’t have the right guidance to know all the stages necessary and get lost through the process. Don’t forget to go through all of these, and if you have any questions, comment at the end of the article or contact us for more help.
Who will buy your business?
If you are wondering about the buyers that can be interested in your Bakery, don’t worry, there are many options and possibilities. From First Time entrepreneurs, to businessmen interested in new opportunities, the chances are that in the bakery industry it may likely be a person who already had a store in the field.
Bakeries are a particular popular business in the United States, but sometimes owners find that the best option is to sell it for the best price. In order to do that, you must do the proper valuation process, and sometimes consider to hire a professional business broker, who will help you with the most complicated aspects.
If you want to start accelerating your buyout process, fill out our free valuation form and get your business valued today! Leave your comments on any doubts or feedback, we are glad to hear your thoughts!