You put a lot of hard work into building a successful Clothing Store, retaining your customers, and creating great relationships and confidence with your apparel vendors. Now you started looking at broader possibilities and some new business opportunities. The main question fashion founders ask us almost every day is: how much is my business worth?
Selling a Clothing Store is more complicated than it seems, and there are different prices depending on your location and profits generated. We had our team research all the deals made in the industry in the last ten years and we created a complete report containing all the details you need to know to start coming up with a realistic selling plan.
What is your Clothing Business worth?
To value your business there are many facts that need to be well defined to attract possible buyers. Below are the information we analyze to predict valuations, and how you can benefit from each topic:
- 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 business worth more?
Now that you started analyzing and answering the last questions focused on how your business is valued, you can begin planning on how to make it being worth more with these next 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 Clothing Store sell for?
After analyzing all the acquisitions made in the last 10 years, we gathered a lot of interesting data, and one of them is the average price a clothing store is sold for in the United States. If you look at the number of deals made in the industry, the average valuation of a clothing store is $251,045, with an average multiple of 2.64 on the earnings. The median or the exact middle of all deals made is $135,000, and the most frequent deal is in the $50,000 range. Since 2005 the total transaction value was $123,082.818. But don’t get confused, in the next few topics we will break down these numbers and give you some valuable insights on the market, valuations, multiples and the steps to start your selling process.
What is the most frequent deal size?
In 2013 and 2014 the deals were more spread out to bigger valuations, but in 2015 it is clear that the smaller stores won in the number of deals by a lot. While businesses with less than $250k in valuations scored 32 deals, the number of stores sold for more that combined was only 12. As the market for clothing stores generally ranges into smaller valuations, if you want to get a deal maybe it is best to stick with the market average and have a smaller store.
Is the Clothing Store market getting bigger?
While in 2014 and 2013 there was a combined total yearly transaction value of more than $140 million dollars, in 2015 that number decreased to only $8.685.096. The market slowed down a lot because of the fast growing ecommerce market that can deliver goods to your home with speed and easiness of just a couple of clicks. But that is still an opportunity to focus on helping and creating awesome relationships with your clients, to provide the help that they wouldn’t have at any website.
Are bigger businesses worth more?
Our research says that the bigger your business, the higher multiple you will get for your sell.
As you can see throughout the images, as you grow your revenue, the multiple goes up and generate a better return on you earnings. In 2015 the clothing stores that were sold for less than $250,000 had a multiple of 1,67. That number almost doubles if you sell it in between the range of $250,000 and $500,000, being 2,46. The businesses that got to the stage of $1mi to $2mi had a multiple of 3,98. So that means that if you think there is an opportunity to grow your revenue and profits the next year, you should wait to get to more than a million dollar valuation.
What states have the most business deals?
Are you wondering where the most deals were made throughout the country, or if your state has a hot market to sell fast? As you can see if you are located in California or Florida, you may get a lot more offers than if you are in Mississippi or Minnesota. But 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 does it take to sell a Clothing 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 Clothing 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 clothing store, 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 fashion industry it may likely be a person who already had a store in the field.
Now that you have looked through our report and seen all the possibilities of selling your Clothing Store, the first step is to figure how much your business is worth. 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!f