One furniture store can be very different from another. Understanding that is an important step before selling your business.
You know there are different types of furniture stores. You may sell used furniture, or you may also sell brand new ones. In both cases, though, the sales process is pretty much the same: it’s all about attracting potential buyers.
Furniture stores can be small or even bigger business, so if you’re going to sell it you have to satisfy buyer’s expectations. But how are you going to do that? Take a look at the following tips and make sure you know how to determine what is your business worth.
What Is Your Furniture Store Business Worth?
To value your business there are many aspects that need to be well defined in order to attract possible buyers.
First of all, you have to understand well where your business is located. This is important because everyone who wants to buy the furniture store from you will ask you how the competition is around. Therefore, a potential buyer will be very interested also at the financial reports you compiled.
Understand how the sales are, what the profit is and other crucial numbers are very important before buying an already-started business.
Here are the most asked questions:
- 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 Furniture Store worth more?
Besides the key characteristics every business has to be attractive to potential buyers, there are some important aspects that make all the differences in the market.
Having a growing or even stable traffic from different sources is a strong differential, as well as a high percentage of repeat visitors and repeat sales. A clean legal history, a very strong growth potential and use of technology incorporated to the store’s routine are great aspects that must be highlighted too.
A pleasant environment, that provides a good shopping experience for customers, invites them to come back very often, and it’s also a very important ato create a respected brand. Check out some other important aspects below:
- 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
What does the average Furniture Store sell for?
After analyzing the furniture store market from the past 10 years, we are now able to understand for how much the businesses are usually sold for. Take a look at the average sales price. Pretty high, don’t you think? Now look at the average multiple: it’s up to 3.
That means that the average asking price for a furniture store is three times bigger than the total gross income. Still don’t get it? Well, numbers are practically saying that selling a furniture store business is frequently a good deal.
But be careful. There has been very few furniture stores which were sold in the last 10 years: only 254 of them. And even the average sales price is $359.291,and most frequent valuation is $100.000.
What is the most frequent deal size?
Speaking on most frequent valuation, if you look at the chart you’ll see that most of the deals made were less than $250k.
The number of total sales usually varies from year to year, but the proportion of deals less than $250k is always the same. In terms of $250k-$500k, deals are not that common, but in 2015 it was almost at the same level as the first category.
Is the Furniture Store market getting bigger?
2015 was a pretty good year for furniture store market:
The chart also shows that these kind of businesses suffer a lot of volatility every year. But if furniture stores are not being sold for spectacular numbers every year, at least deals made are getting better and better.
In 2010, there have been very few deals and most of them were made by less than $250k. Five years later, things have changed. There haven’t been a lot of millionaire deals, but it was the first time since our research could find that a $2-10 million deal was made.
If we take a careful look into the numbers, we’ll notice a very positive growth trend. The market may be getting better and will be no surprise if 2016 numbers be even bigger than 2015’s.
Are bigger businesses worth more?
Not always, but in this case the higher the deal size the higher the multiple rate. As you can see throughout the images, as you grow your revenue, the multiple goes up and generate better returns on your earnings.
Take 2015 numbers for instance: furniture stores sold for less than $250.000 had a multiple of 1.6. That number will be a little bit higher if you sell it in between the range of $250,000 and $500,000, being 1.9. The same happens if you sell your business at higher prices.
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 New York, Maryland, Illinois, Florida, District of Columbia, Connecticut or California, you probably will find it easier to sell your furniture store business.
States like Idaho, Georgia, Hawaii and Nebraska had few or no sales according to our research.
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 furniture 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 furniture industry it may likely be a person who already had a store in the field.
There are very different types of furniture stores, and therefore different valuations to all of them. Before selling your business, though, you must have all that differences in mind, get to know exactly how competition works around you and learn how to sell and improve the qualities to potential buyers.
At the end of the day, the bigger your business the better the deal, but don’t confuse yourself: it’s not that easy to sell a furniture store and you better consult a broker business professional before making any decisions.
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!