Valuing a Footwear Wholesaler
The footwear wholesale industry supplies shoes to retailers from a manufacturer. This industry has had to adapt over the last two years. With the pandemic upsetting the supply chain, wholesalers were in a difficult spot. To cut costs, many retailers bypassed wholesalers and bought straight from the manufacturer. This eliminated the need for wholesalers, which hurt the industry. Even with those bypasses, footwear wholesalers have managed to increase their revenue at an annualized rate of 1.3%. Retail has moved most of their business online which has helped keep them in business. This helps footwear wholesalers remain in business as well. Each of these aspects impacts the value of a footwear wholesaler.
Whether buying or selling, it is important to understand the fair market value of a footwear wholesale business. It is also just as important to understand the key success factors impacting footwear wholesaling. At Peak Business Valuation, business appraiser, we work with people around the country who are buying or selling footwear wholesale businesses. The first step in doing so is receiving a business valuation. At Peak Business Valuation, our business appraisers will discuss key factors an expert uses when valuing a footwear wholesale business. Keep in mind the below factors are only a reference. For specific information, schedule your free consultation with Peak Business Valuation, business appraiser.
Market Multiples for a Footwear Wholesaler
- SDE Multiple Average: 3.91x
- EBITDA Multiple Average: 4.74x
- REV Multiple Average: 0.55x
**Disclaimer: These multiples are for educational purposes only. As such, the information provided does not constitute valuation advice. These multiples do not represent the valuation opinion of Peak Business Valuation or its valuation professionals. Instead, seek the guidance and advice of a qualified business valuation professional about any matter in this article.
The above are average market multiples for a footwear wholesaler. Due to limited footwear wholesale transactions in the United States, these multiples are industry averages. As such, it is best to get an independent business valuation to determine applicable valuation multiples for your footwear wholesale business. A valuation analyst uses a variety of methods to determine a fair market value including using multiples. In the process, they will compare your company to similar companies that recently sold. Then they will apply an applicable market multiple to your footwear wholesale business.
Through understanding the value of your footwear wholesale business, you can learn how to grow it and maximize revenue. This will benefit your business whether buying, selling, or growing. Here are a few helpful ideas to help increase the value of your footwear wholesale business. For a detailed valuation, schedule a free consultation with Peak Business Valuation, business appraiser.
Key Success Factors
Peak Business Valuation, business appraiser, values footwear wholesalers on a regular basis. To increase the value of your business, focus on these success factors. These success factors will help maximize the value of a footwear wholesale business. Be sure to take a look at Value Drivers for Footwear Wholesale for more ideas.
Finding Reliable Manufacturers
As stock continues to be limited, it is important to surround your business with trustworthy manufacturers and retailers. If a manufacturer does not deliver, it does not look bad on them, it looks bad on you. Retailers do not work with manufacturers, they work with wholesalers. This means if they don’t receive their product, they have you to blame. That being said, working with reliable manufacturers is essential to the success of your business. This success factor should be established right away. If there are problems with your manufacturer, make it known or consider switching. Your footwear wholesale business will suffer if you do not align yourself with trustworthy suppliers. Creating contracts with reliable manufacturers can help reduce risk when selling a footwear wholesale business.
Next, as you may know, recurring revenue is the most important revenue source. To establish recurring revenue as a footwear wholesaler, you must be a key supplier to retailers. This is done in several ways. The first way is through creating good relationships with key retailers. Oftentimes this is the responsibility of the business owner. However, the relationship should not be dependent on the business owner – contracts can help avoid this. Another great way is through marketing. A strong marketing team will focus their attention on important retailers. A footwear wholesaler is only successful if it can sell its products in bulk. This means becoming the main supplier to retailers.
A business appraiser at Peak Business Valuation will consider revenue sources as they determine a fair market value. The more recurring revenue your business receives, the more valuable your footwear wholesale business can be.
Last, to ensure retailer satisfaction, a footwear wholesaler must be efficient. Wholesaling is about getting bulk products from one place to the next. If this is not done carefully and efficiently, a footwear wholesaler will not be a successful business. A retailer must be able to rely on your business to get its product in a timely manner. This goes for ordering, processes in the warehouse, and delivery.
Efficiency is established in many ways. First, get organized and establish processes and procedures. A business owner should regularly review the business plan to ensure efficiency is being met. This success factor is a great one to start with as it will improve the overall success of your business. A business appraiser at Peak Business Valuation will look at processes to better understand the status of your footwear wholesale business. They will also analyze financial ratios such as efficiency ratios and compare them to industry averages.
In summary, there are many more factors to consider when valuing a footwear wholesale business. Understanding the value of a footwear wholesaler is necessary whether buying or selling. Consider receiving a business valuation to help you understand the fair market value. A business valuation will also identify opportunities to increase the value of your footwear wholesale business.
Peak Business Valuation, business appraiser, values footwear wholesalers across the nation. We are happy to answer your questions and meet your business valuation needs. To schedule a free consultation, click the link below.
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