Should I Buy This Business?
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- เผยแพร่เมื่อ 23 ก.พ. 2023
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This lady should get a 3rd party evaluation of the business.
Then you can setup a plan where you can earn part of the business every year......give 25% of the profit for 4 years get the business outright....plus goodwill......lots of ways to get creative....on acquiring the business
Agreed
My honor and respect to the lady who owns it now. When most medical professionals charge arms & legs, the service she is doing is priceless. May you live happy and have a long healthy life. 🙏
Another way to express this concept is, "How long will it take to get my purchase price back?" {Four or five years}
Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got to talking about investment and money. I started investing with $150k and in the first 2 months, my portfolio was reading $274,800. Crazy right!, I decided to reinvest my profit and get more interesting. For over a year we have been working together making consistent profit just bought my second home 2 weeks ago and care for my family.
Hi. I’ve been forced to find additional sources of income as I got retrenched. I barely have time to continue trading and watch my investments since I had my second child. Do you think I should take a break for a while from the market and focus on other things or return whenever I have free time or is it a continuous process? Thanks
@@caseycantrell-gh6fg However, if you do not have access to a professional like JUDITH ANN PEACE, quitting your job to focus on trading may not be the best approach. It is important to consider all options and seek guidance from reliable sources before making any major decisions. Consulting with an AI or using automated trading systems can also be helpful in managing investments while balancing other commitments
@@lennoxmutterick6434 Oh please I’d love that. Thanks!
@@caseycantrell-gh6fg Judith Ann peace is her name
Lookup with her name on the webpage.
9:22 Business owner technically gets burned on uncollected interest on and uncertainty of future cash flows, but that overall deal still seems fair to me.
This lady could just as well start up her own shop (without competition from the retiring owner) and then take all the money she would have spent on buying that business and put it into her own business instead.
You mean, to buy duplicate equipment and renovate another office? Would they really save any money?
Loving this Entire Leadership podcast with the OG behind the microphone. SOLO. :)
Mee too. I was bummed that he has left the Ramsey show pretty much. But then I found out about this podcast, and it’s becoming one of my favorites because the old bull is back
Make sure the owner doesn't want to keep "silently" running the business after she's sold it.
This is so important. Owners have to leave.
This was super informative!
Yeah, this was a good one.
This was a great educational video. Thank you!
Agreed!!
Such good advice Mr Ramsey ….. never thought of it that way with the SBA loan !
There is a formula when buying a business at the right price. Most business are worth what is called blue sky, what's that? You add up the last three years added together then divide by three gives you average yearly income, two or up to too 5 years is called blue sky number to be buy or sell is fair. If it has tons of equipment or buildings are a separate number. Blue sky is best best situation. Go ith someone that is making the right amount of money. DANG Dave your are just great leader brother. I always offer 3 times blue sky to buy. Be fair and it works out to be your value. Greatvcall t
Great advice
I bought an insurance agency when i was 31 years old & i paid 2x the annual commission + the building at 20% above market value as the previous owner had a lot of $ into the building.
Sounds like you got f**ked
Sir/ma’am may I ask how you do that? That seems pretty cool like it will just continue to generate money and you can retire.
@@peter-jm1pu graduated high school, walked into an agency asking for a job, was hired. 12 years later owner wanted to retire so he sold me the business on a 20 year loan & never looked back. It’s a lot of hard work though work between 50-60 hours a week.
Equity multiple being paid also can be based on medium to larger businesses run rate potential. Tech companies like SAAS can go for 25 to 30 equity multiples of what they currently are doing because of the growth potential to scale larger. If a business is running almost as well as it can and has maxed out high growth rate and now is normalized growth rate then the 3 to 5 times comes more center stage.
Thanks for sharing that 🙌
She is awesome! I hope it works out!
PT OT and Speech therapy are some of the least profitable business endeavors anyone can pursue. The only they work is if they are directly owned by the physician/ surgeon office.
Just take the 75k and start your own practice. All those people will have to go somewhere when the other person closes shop
The thing with net profit is that a clever accountant can make it so the profit is lower or zero. Ask the Movie Studios how this works.
Yeah that's why all actors and people that are paid cut went to a gross formula, according to Movie studios every movie lost money but somehow they were still in business
Awe tear at the end.
Wonder if they could covert this business to a non profit and start making the free care they give a staple of the business. And or donating to other causes..
They will probably make more money and be able to afford more in salaries because of it, and be building a company ethos around all the free care they provide.
Non profit business must be profitable and the lower tax helps that. Especially when you have a core of you business done for free as donation anyway.
(Also, if they are donating so much care, hopefully they are taking deductions for the cost of that care…)
Talking about Net Profit, in small business we are looking at monthly, or yearly net profit?
...annual in this context I would have to imagine...
The first time I’ve heard Dave allow the concept of good debt.
Never heard him talk about a mortgage?
Not really. He's proposing the former owner maintain a vested interest in the company until the full purchase price is received.
It’s not debt if the business makes no money then the former owner gets nothing.
He literally talked her through how to do the purchase with 0 debt
@@meganeisemann754 why would any business owner agree to take on this risk when they sell their business?
These are good purchase terms for businesses like this, but company that's truly performing won't sell with these conditions.
4:29~
So if a business owns its assets and is making a profit would your valuation = book value + (net profits x “4 or 5”)?
No. Its the greater of the two.
@@JL10007406 or the average
@@hersheyskwertz9315 The traditional formula is the greater of the two valuation methods. Not the average.
...please listen...he clearly states to choose one...
Dave, that sounds like a terrible plan. Offer her $20K for the equipment and use your own $55K to improve the business.
If the community is so small, and there’s no other competition, why doesn’t she just make her own business? The value of the clients isn’t worth much if it’s just the entire small town
Might as well buy it on a profit share deal anyway. You get the name and clients and being developed in the community. You don’t have to compete with the only other business in town and make people choose between their good ole doc and the new person..
You buy it, only paying for it if it makes money, and then get to advance upon the basis created without having to pay the premium it Costco to start from scratch. This is a good deal all the way around, assuming she can afford to float the business while it’s down and can make the business more profitable than it is… or even convert it to a non-profit and start making their free care a staple of the business.
Adrienne, the caller, would need to see the 2018-2022 tax returns for the private PT practice. What were the net profits, after taxes, before, during, and after the Pandemic? To pay $75k up-front is hazardous, unless the profit history or trends clearly support a prospective 20%-25% annual return on the gross price. If the owner expects to retire comfortably on the sales downpayment, followed by installments, there might be big trouble if the firm's results are unstable or meager. Did the owner's compensation include both a salary and the net profit (or loss) of the LLC? How many work-hours did the owner contribute? What replacement costs? Who has been keeping the books? Could Adrienne learn that task? What is the mix of clients that pay by Medicaid (kids), Medicare (old types), private insurance (employees), cash, turnips and chores, or nothing? What share of receivables must commonly be written off? The book value is probably negligible, especially if the fixtures are dated, and given that the greater Ashville area is already saturated with dozens of PT offices.
I wondered exactly that, if she was paying herself a salary it could have been making great money and it would make the net profit super low
I would offer the owner $45K. If she doesn't take it, I would open up my own PT clinic across the street.
“If you’re not making a profit it’s not worth much” Tell that to all the Tesla investors, lmao.
If Dave was paid based on the quality of his advice, and the results IF the listeners were to do what he said......he would be the richest men alive.
Why would a business owner take on risk by selling their business to someone in this manner? It's like becoming a silent partner.
If a new owner buys it and then runs it into the ground and it goes bankrupt, the previous owner is out of luck.
Because the owner is trying to retire and this business is virtually unsellable to anyone except this caller.
I'm struggling with the idea that Dave Ramsey just told someone to get in debt
Sounds like she's very close to buying herself a job but if she can make a few changes and turn a profit in addition to her salary, more power to her
2.5*Net annual profit. 4 or 5* is too much.
Look at the bottom line, not the top, so ignore EBITDA
Owners will ALWAYS over value their business
Its amazing how clueless people are in this field
Dave is out of his depth when it comes to buying/selling businesses. He's taking the real estate knowledge he has, sprinkling in some bits and pieces he's picked up about main street businesses, and serving it up in a way that sounds convincing, but is completely lacking in substance. 4x isn't a 25% rate of return, what's important here is the internal rate of return which is closer to 19%. He also mentions venture capital - venture capital has absolutely nothing to do with a transaction like this, I literally gasped when he said that. Also, 4-5x for a business that is barely breaking even by the sound of it is too much. He didn't even get into trend as well. Be careful.
Yeah I'm not sure why everyone acts like he is the Messiah reborn when we all know that is really Trump but Dave is really so out of touch with the real world I'm guessing he's been rich so long he can't tell you what a gallon of milk costs or a cheap starter home either. I saw him tell a guy making $80k and his girlfriend making $95k that they couldn't afford a house worth $180k and I could have pooped in the floor and the caller should have said Dave that's the cheapest house possible and the mortgage and taxes and insurance will be cheaper than rent cause he had no damn clue what he was talking about giving terrible advice and it's all the time
You'll get certificates of appreciation with presidents' faces on them!
That's honestly a great line
I gotta use that one
What is Dave Ramsey talking about??? He wants to pay 4-5x multiple on something that has unreliable profits? So much so, that the glorified "office manager" can't afford to pay herself most times? That little piece of trash is probably grossing around 100k and no one should pay more than 1x on net of profit for this. But you're better off working a job than this misery. On top of all that I'm suspecting that bookkeeping in that business would be a bloodbath. I could bet anything that most accounts are way overdue and wouldn't stand up to GAP. A decent audit with a regional accounting firm would actually force that lady to pay YOU to take over that business.
Dave is way off on this as usual.
It's hard to tell really. The owner could have been paying herself a salary of who knows what and if you haven't seen the books and didn't know that it could look like there was no profit but she took $250k in salary already
I agree with you. Advising someone to pay a 4 -5x multiple for a business without stable cashflows and as an owner operator is insane advice.
adrians semi
all dogs go to heaven sigh
mike lamothe and i
4-5x is wayyyy to high unless the Profit is over $1mil
When was the last time you bought a business ?
But mr ramsey is actually wrong… i buy an alligator 🐊 for a dollar im making boots and belts and get that dollar back plus 1000X
Women in business be like