|
|
|
Why Rules of Thumb Don't Work
-
Imagine two Car Washes, same
area, same annual sales.
-
Rule-of-thumb: Car Wash worth
2X annual sales.
-
Yet Car Wash #1 may be worth twice Car Wash #2.
- Car Wash #1:
- Located in upscale neighborhood.
- New store, did $300K last year, $600k this year, projects $900k
next.
- New property, fixtures, equipment.
- Sharp aggressive management.
- Everything about business on a positive upward trend.
- Car Wash #2:
- Located in a bad part of town.
- $600k this year, sales trending down. Did $900k a few years ago.
- Lots of deferred maintenance, old equipment etc.
- Everything about business on a negative downward trend.
- Two businesses, same sales, completely different values.
- Never rely on rules-of-thumb to value a business.
BACK
|
