Valuing a Furniture Store
The furniture industry has experienced its fair share of ups and downs. Many furniture stores are small, locally owned businesses with few employees. In fact, 35% of the furniture market comprises non-employer businesses. Because of this, competition is high. This causes furniture stores to compete in a price-based competition. As the COVID-19 pandemic took the stage, many furniture stores had a hard time keeping up with the market and eventually closed. However, with the housing market so hot, furniture continues to be in high demand. These factors impact the value when valuing a furniture store.
Whether you plan on buying or selling a furniture store, it is important to understand the business’s fair market value. As well as the many things that impact the value of a furniture store. As a business appraiser, Peak Business Valuation works with many individuals who are buying or selling a furniture store. The first step in that process is obtaining a business valuation. As part of this process, we discuss some of the key factors the expert uses when valuing a furniture store. Keep in mind that the below factors are only a guide. For specific information, schedule a free consultation with Peak Business Valuation, business appraiser.
Market Multiples for a Furniture Store
- SDE Multiple Average: 2.83x – 3.55x
- EBITDA Multiple Average: 3.62x – 4.19x
- REV Multiple Average: 0.35x – 0.67x
**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 furniture store. A valuation expert uses a variety of methods to value a furniture store including the use of multiples. When using multiples, the valuation expert will compare similar companies that recently sold. They will then apply an applicable market multiple to your furniture store to determine a fair market value.
Understanding the value of your business will help you learn how to increase its worth. This will benefit your business whether expanding, acquiring, or maximizing the value of your furniture store. Here are a few helpful ideas to help increase the value of a furniture store. For a detailed valuation, schedule a free consultation with Peak Business Valuation, business appraiser. See also Valuation Multiples for a Furniture Store.
Key Success Factors
Peak Business Valuation, business appraiser, values furniture stores on a regular basis. Below are key success factors an expert looks at when valuing a furniture store. To increase the value of your business, focus on these success factors. It is a simple way to assess your business while increasing its fair market value. For additional ideas see Value Drivers for a Furniture Store and How to Value a Furniture Store.
E-Commerce
The Covid-19 pandemic completely changed society. E-commerce became extremely popular, and most shopping went virtual. Prior to the pandemic, furniture stores were mostly an in-person experience. However, the pandemic caused furniture store owners to completely adapt their business strategy to integrate e-commerce. If a furniture store wants to be successful, they need to have a strong internet presence. This means a user-friendly website, with “easy on the eyes” design, and a support team to answer questions or provide assistance. Having an online store and presence gives the opportunity for consumers to view products before coming into the furniture store. This can save the furniture store significant time when closing sales. See also, The Value of SEO.
Peak Business Valuation considers different types of revenue streams when determining a fair market value. It is important to obtain business from many sources as that will increase the value of your business. E-commerce business is an important success factor as it has the potential to significantly increase the value of your furniture business.
Trained Sales Team
Just as a strong e-commerce presence is important, so is a trained sales team. Your sales team is the main face of your furniture store. They are the ones bringing in revenue, coming in contact with customers, and creating the environment for the furniture store. A team that is not trained will not fulfill the goals stated in your business plan. Therefore, your value will go down. This is a great value driver to focus on as it is ever-changing. As the turnover rate is high, it is important to have structured training in place to make employee transitions easier. Trained sales personnel will increase revenue as they close sales and drive volume.
Stock on Hand
It is no secret that stock is limited. This is due to the Covid-19 pandemic and unfortunately has not improved over the last two years. As a business owner, it is important to do everything in your power to keep stock consistently coming. If that is not possible, openly communicate with the customers. Nothing drives a customer away more than poor communication. Stay ahead of your inventory. Order in advance and remain vigilant of popular demand. A furniture store that has stock on hand will be more successful than any other store. Most customers are impatient and do not like to wait for shipments to come in.
This value driver has the potential to drive your business up more than any other. Nearly every industry is experiencing problems with supply. As demand continues to rise, it is difficult for companies to stay on top of this issue. Because of this, Peak Business Valuation, as a business appraiser, will consider historical averages to better understand a company’s operations for a normal year. For more information, schedule your free consultation below.
Summary
In conclusion, there are many important success factors to consider when valuing a furniture store. Understanding the value of a furniture store is important whether you want to buy or sell. Consider obtaining a business valuation to help you understand the fair market value and identify opportunities to maximize the value of your furniture store.
Peak Business Valuation, business appraiser, values furniture stores across the country. We would love to help you understand the value of your furniture store. Reach out with any questions you may have about valuing a business. To schedule your free consultation, click the link below. We look forward to hearing from you.
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