Tropical wood has a strong demand in the United States. Therefore, products manufactured or with added value stand out among business opportunities, as they import about 1.7 million of tropical wood every year.
The US market accounts for 16% of total furniture consumption in the world, turning over $71 billion a year. The country is also the second largest producer and consumer and the world’s leading furniture importer.
In 2009, during a severe economic crisis, the United States experienced a sharp drop in several industrial sectors, including the furniture manufacturer. Six years later, however, the market seems to be recovered, registering an increase of 21% in their business during this period.
Businesses like that are very profitable and interesting for selling. But do you know how to do it for the best value? It’s surely not an easy task, and in the next few topics you’ll learn exactly why it is so important to make sure you are not selling your business for a lower price.
What is your Furniture business worth?
But the very first thing you need to do is discover what your furniture manufacturer business is worth. In order to do that, follow these next steps:
- Invest in a showroom, which is an important sales tool – 50% of the sales are held in these spaces, which can be fixed, mobile or installed in the store. The showroom allows the seller to show the products in a different environment. Thus, you can expose the entire proposal far from frequent interruptions, such as phone or employees, creating a better message connection.
2. Provide catalogs by direct mail .
3. Place your merchandise at great interior design stores.
4. Build a website to serve as a showcase and sales channel for their products.
5. Keep high quality of the furniture to attract customers and ensure revenue and profitability.
6. Adapt your business to the reality of the economy offering, if necessary, more affordable products, but with not much loss of quality.
What makes a Furniture business worth more?
In the early 30s, the most common idea was that the desire should override the need, turning consumption into a tool for the country’s development. In other words, american citizens used to be encouraged to buy in order to stimulate the industry.
Today, although the american consumerism continues to be high, the speech in favor of conscious consumption, also restricted to activists, has gained more and more followers among companies. Still, the United States has peaked consumption not only of red meat, sugar and fat, but also furniture.
The reason is that it makes no sense to force consumption in rich countries, both from an ethical point of view and from a business point of view. Admitting that people do not need more tables and chairs sounds like a death sentence. But not in the major manufacturers vision. According to them, most people still don’t have enough, and need furniture for their homes, so there is an opportunity for growth and a way to deal with inequality.
What does the average Furniture business sell for?
Since 2005, there have been 123 furniture manufacturers business sales, with a very high average sale price, almost $800k.
For the number of sales, total transaction value is high enough: $98 million, with an average multiple of 3.24, which means asking price usually is three times bigger than average gross income.
What is the most frequent deal size?
Furniture manufacturer businesses are usually negotiated by $100k, since most of sales are less than $250k, as you can notice by checking the chart.
In 2015, however, there have been less sales under the million dollar mark. In 2014, the same happened in less than $250k and $250-500k deal sizes.
Is the Furniture market getting bigger?
2014 was definitely a better year than 2015 ($12 million over $6,5 million), but last year was still a good one, since every past year until 2008 had a total transaction value lower than 2015’s.
So it is actually a good moment for selling your furniture manufacturer business, especially because average sales price is very high and multiple is great too.
Are bigger businesses worth more?
Not in this case. As you can see in the chart, the lower the deal size the higher the multiple rate, but it depends on the year as well. It’s important to highlight, though, that this is not what usually happen.
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, Texas or Florida, you may get a good chance for selling your business for maximum vale. 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, so you may get lucky with states such as Wisconsin, New Hampshire, Nevada or Kansas.
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 Furniture 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 Furniture 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 Furniture Manufacturer, 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 furniture manufacturer industry it may likely be a person who already had a store in the field.
Furniture manufacturer businesses are living a good moment, and the one who’s trying to sell it may get a very good offer, as average sales price is almost $800k and multiple rate is up to 3, which means you can profit more than three times over your total gross income.
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!