Sole trader to Ltd Co

[arbclimber]

Ashawandco.

 

Yes i see your point, maybe in our industry then a business doing regular garden maintenance would have a significantly higher value of good will than a tree surgeon doing 'One off jobs'. If i understand you correctly?

 

Actually, I take back my comment about being concerned if my accountant did what you are doing. I have noticed the times of day you have been doing this research and hope my accountant would spend his evenings researching for me in that way.

 

I ran my business for 7 years and when sold it had 2 full time employees. I think it relevant to say that I actually sold the business to one of these employees which I do think increased the value of the goodwill as my customers already knew the new owner. The sale was reasonably complicated as I still work for the business doing the marketing/ estimating and suchlike but for our purposes of our sale we valued the goodwill at £5000 which we all agreed was fair enough. To put that into context I had an average t/o of 100 - 120k and profit of c 50k per annum. I also took a percentage of all work booked at time of sale.

 

Hope this helps. Happy to share details on here as no-one knows who I am anyway.

[ashawandco]

Arbclimber, that would be right re maintenance vs tree surgeon though a fully qualified tree surgeon might have less competition and therefore be marked up for that. He might have less work too of course. Definitely not a science!

 

That's a really useful benchmark, though I wish you'd said £50,000! If I use your figure (and it's the right kind of goodwill) I should save the guy £1,000 (20%). I can double that and hope to save £2,000 and the only downside is that HMRC rebut and he ends up paying Capital Gains tax - except he wouldn't 'cos he'd be covered by his £10,100 annual exemption. That may have sent you to sleep!

 

Thanks very much for the info.

[arbclimber]

Arbclimber, that would be right re maintenance vs tree surgeon though a fully qualified tree surgeon might have less competition and therefore be marked up for that. He might have less work too of course. Definitely not a science!

 

That's a really useful benchmark, though I wish you'd said £50,000! If I use your figure (and it's the right kind of goodwill) I should save the guy £1,000 (20%). I can double that and hope to save £2,000 and the only downside is that HMRC rebut and he ends up paying Capital Gains tax - except he wouldn't 'cos he'd be covered by his £10,100 annual exemption. That may have sent you to sleep!

 

Thanks very much for the info.

 

My goodwill may have been worth a lot more but at the time it suited me to sell, It was all the bloke could afford, he wanted to keep me on part time for estimating and such like and I had other priorities so it was a win/ win situation. Not saying that a business such as mine has goodwill worth 5k just thats what I got for mine. Hope it helps.

[skyhuck]

I am a one man band, I have a labourer who works for me.

 

I think many are under valuing the good will a small Co can have.

 

I have had the same mobil and land line numbers for over 12 years and I would not sell them for £20K

 

I get calls for all manner of people who have been given my number by a previous customer.

 

I know your client has not been going long, but every satisfied customer can lead to any number of referrals.

[nailer]

I am a one man band, I have a labourer who works for me.

 

I think many are under valuing the good will a small Co can have.

 

I have had the same mobil and land line numbers for over 12 years and I would not sell them for £20K

 

I get calls for all manner of people who have been given my number by a previous customer.

 

I know your client has not been going long, but every satisfied customer can lead to any number of referrals.

 

Too right. A year's worth of customers that are recommending you continuously can replace all advertising costs. Ashawandco, does your client have the email addresses of all those customers?