B&Bs rated the most expensive UK small business to purchase
20th August 2015 | News
Bed and breakfasts (B&Bs) are regarded as the most expensive type of small business to purchase in the UK, according to research by Direct Line for Business.
Analysis of small and medium-sized businesses for sale in the UK found that, on average, B&Bs have the highest sale valuation of £4.49 for every £1 of turnover generated.
The second most expensive business type to purchase in the UK was care homes, with an average sale valuation of £2.56 for every £1 of turnover generated; followed by nurseries at £1.91 for every £1 of turnover.
The cheapest sale valuations compared to business turnover were, perhaps unsurprisingly, internet and service businesses which can be purchased for an average of £0.51 and £0.81 per £1 of turnover respectively.
Nick Breton, head of Direct Line for Business, said: “B&Bs will include the purchase of expensive assets such as property, property contents, website and domain registrations, social media feed access and good will which all add up.
“Indeed, coupled with the rise of the ‘staycation’, the future is strong for B&Bs.”
Unlike businesses with concrete assets, internet company purchases usually only involve the transfer of intellectual property which is not normally as valuable as physical property.
“Small businesses are the lifeblood of the UK’s economy and it’s great to see that in many sectors there are deals to be hand,” added Breton.
“People looking to become their own boss or invest in a business can purchase an existing enterprise with a proven revenue stream and customer base.
“However, whilst turnover is a positive marker it isn’t the whole story. Current and future profitability need to be thought about when assessing the potential value of a business as well as the assets that come with the business.
“There are many different models for valuing a business so it is important potential purchasers analyse the valuation price using a range of metrics.
“As such, ensure that you have undertaken thorough due diligence and recognise that you are not just taking on a business, you are potentially taking on staff, stock and property, and as such all of this needs to be protected.”
Image: Victoria Winters