Business development · 10 November 2017

Average value of a small business in Britain tumbles to 90, 000

The value of a small business is dictated by factors like turnover and net profit
The value of a small business is dictated by factors like turnover and net profit
The average value of a small business in the UK has fallen by 4, 000 in the last 12 months, according toa new study of valuation data.

Using data from three years? worth of business valuations, amounting to almost 7, 500 companies, transfer agent Bizdaq was able to present sales trends and assumptions on why the average worth has fallen.

Business values are calculated using turnover and net profit, so the sudden decline could point to both increased costs for owners and reduced consumer spending power.

Despite the year-on-year slide, the latest figure remained higher than that registered in 2015 (£89, 000).

The research revealed’significant discrepancies between business types. The average value of a traditional British caf? dropped 15 per cent to 45, 000, while coffee shops had in fact risen 3, 000 in value to 65, 000.

Elsewhere, small manufacturing businesses registered an average worth of 418, 500 an increase of 100, 000 in just 12 months.

Read more: A due diligence guide for business buyers and sellers

Commenting on the data, Sean Mallon, Bizdaq CEO, said the frustrating? reduction in value was leaving small business owners with diminishing levels of return on their hard work and investment, but suggested it was an expected consequence of economic uncertainty.

a business? value is in many instances tied to revenues, and particularly profit, so falling values may be indicative of a fall in these across the board, with a recent rise in interest rates putting further strain on the UK’s small businesses, Mallon explained.


 
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Praseeda Nair is the editorial director of Business Advice, and its sister publication for growing businesses, Real Business. She's an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.

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