Finance / Bed and breakfasts 'among most expensive small businesses to buy'
Bed and breakfasts 'among most expensive small businesses to buy'
19 August 2015
A charming B&B may seem like an attractive and lucrative place to invest in when starting a new chapter in life, but figures show it could be among the most expensive types of small businesses to buy.
Figures from Direct Line for Business insurance show that for every £1 of turnover generated, bed and breakfasts have a purchase value of £4.49, compared to the average of £1.74 for the average UK small firm.
Second most expensive are care homes with a sale valuation of £2.56 per £1 of turnover, followed by nurseries at £1.91. The cheapest to pick up are internet-based businesses with a relative value of 51p per pound of revenue.
The three categories topping the table do so because buying them normally also involves the purchase of property.
Purchasing an internet firm involves the transfer of intellectual property, which at the small business stage does not hold as much value as physical assets, the report said.
Nick Breton, head of Direct Line for Business said: “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 had.
“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.”