Buying a Business
Cost to Buy a Business in Wichita
Planning on buying a Wichita, Kansas business? Your first question will probably be "How much does it cost to buy a business in Wichita?"
The good news is the folks at BizBuySell.com have made some data available on what businesses are going for in Wichita.
BizBuySell.com is the largest online marketplace for business-for-sale transactions. The vast majority of business brokers in the country put their business listings on BizBuySell.com. In addition, many business owners who are selling on their own, without a broker, will place listings on BizBuySell.com.
If you are looking to buy a business in Kansas, check out the BizBuySell Kansas listings to see the latest business-for-sale listings for Wichita and other Kansas cities.
Business Valuations in Wichita, KS
According to BizBuySell.com, the median asking price for an Wichita business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $186,800.
That was based on 31 listings in the Wichita, KS metro area. Many of the businesses in the dataset are outside of Wichita, but they are in the area and so are probably representative of Wichita business valuations.
Remember that this is the median asking price for a business. If you are in the market to buy a company, you may be able to buy an Wichita business for much less. At the same time, some Wichita businesses may cost much more.
Importantly, this is the asking price for an Wichita business. Typically, when a business owner lists a business for sale, they start with an asking price that is higher than the ultimate sale price. The sale-price-to-asking-price ratio varies considerably but typically might be between 0.85 and 0.90. In other words, a business listed for $100,000 might sell for between $85,000 and $90,000.
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for businesses in the Wichita, KS metro area for the last 8 quarters.
Revenue Multiples In Wichita, KS
In the Wichita, KS metro area, businesses will typically sell for 0.74 times the selling company's revenues. That was the mean revenue multiple for Q4 2008 in this area of the country.
In other words, a firm with revenues of $200,000 might list for $148,608. Remember, however, that this is in fact an average for revenue multiples in the area. Some firms will have higher revenue multiples and others will have lower revenue multiples.
Here is how median revenue multiples are trending in the Wichita area, based on BizBuySell.com's quarterly reports.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $300,000 in Q4 2008.
Cash Flow Multiples In Wichita, KS
Another popular way to value a business is through cash flow multiples.
For Q4 2008, the average cash flow multiple for listed businesses in the Wichita, KS metro area was 3.05.
So, a business with cash flows of $120,000 might have an asking price of $365,441. That's if the business fits the area average. Most businesses will not conform to industry- or area averages.
The table below shows how cash flow multiples are trending in the Wichita area, based on BizBuySell.com's quarterly reports.
In case you were wondering what typical cash flows are for a business in Wichita, BizBuySell.com reports that the median cash flow for Wichita area businesses was $68,000 in Q4 2008.
Things to Consider When Buying a Business in Wichita, KS
Credit is tight in this economy. Given that banks may be unwilling lend you money for the purchase of a business, you may want to look for seller financing. When a seller gives you financing, it shows they have confidence in the business, as well as confidence in your being able to run the business well enough to pay off the seller note. This advice on financing a business purchase comes from Domenic Rinaldi, managing partner of Chicagoland Sunbelt, a leading business brokerage firm.
Business Valuations for Wichita, KS Businesses
If you have a specific business in mind and want to find out how much a business is worth, we recommend the BizBuySell.com Business Valuation Tool. You can refine the dataset that generates business valuations to meet your specific needs, and access to the tool is very affordable -- less than $100.
More Information on BizBuySell.com's Quarterly Reports
The BizBuySell Insight Report is a nationally-recognized economic indicator that tracks the health of the U.S. small business economy. If you find this data interesting, be sure to visit BizBuySell.com Insights Report for more information.
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