Home – New Forums Money matters Looking at buying an existing business – need some figures Reply To: Looking at buying an existing business – need some figures

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bennos, post: 81684 wrote:
Well aware of this. There is nothing in this post that will expose specific details of actual business or it’s location.
No accusation just a caution as actual figures seem to have been used and may be sensitive if the current owner sees this.

bennos, post: 81684 wrote:
“CoG 3,500… Rent 2,500… Wages 3,500”
COGS are generally not taken as an expense but as the name implies cost of goods sold. Rent yes an expense (all be it pretty high for a weekly basis). Wages can be taken both as an expense or COGS depending on what the business does – manufacturing often apportion some of the wages to COGS. Does wages include a wage for you the new owner?

bennos, post: 81684 wrote:
If you’re referring to net profit. It’s 30% of turnover. Is that high?
If you’re not sure – it’s really another indication of getting someone in your corner that does know and can help you and yes that is high.

Expenses – here are a few common to most businesses;
Accounting fees
Bank charges
Computer and office expenses
Motor vehicles (fuel, rego etc.)
Printing and stationary
Registration and licence fees
Telephone / Internet

Please don’t take my input as a critism but rather as a caution – I too bought a business in 1994 and it cost me a lot of money (and sleepless nights) because I didn’t use a professional to verify or question some of what the broker and seller were presenting. I was too excited by the prospect of being in business and only saw the upside.

Some great advice / questions from StellarScott, King and all the others that recommend an accountant.