How to Value Your Inn...
Thinking about selling your inn?...
You may be wondering if there is any specific formula in setting a value for your Bed and Breakfast so that you can arrive at a fair sales price.
Not all properties are created equal and can be valued exactly the same. There are many opinions on how a business should be valued. We offer our opinion and methodology based upon sound real estate principles to assist you with the never ending question
"How do I value my inn?"
"CONSERVATION OF MASS" teaches us the whole is equal to the sum of its parts. Although this is a scientific principal, we believe this is the
METHODOLOGY that is necessary to properly arrive at the
WHOLE VALUE for your inn.
WHOLE VALUE = Base Value + FF&E + Business Value + Goodwill
BASE VALUE: Land + Improvements
FF&E: Furniture + Fixtures + Equipment
BUSINESS VALUE: Going Concern Value
GOODWILL: Corporation, Trade Name, Domain Name, Copyright, etc..
ESTABLISH THE BASE: Determine the value of the land and improvements. Obtain the services of a Property Appraiser for establishing this value.
FF&E: Inventory everything that will be included in the sale. Establish the replacement cost. Anything that is necessary to the continuity of the inns operation should be included.
BUSINESS VALUE: Determine the value of the business as a going concern. This value can be expressed by dividing your Net Operating Income (NOI) by the Capitalization Rate (R). Your Property Appraiser can assist you with this calculation.
GOODWILL: This value is the most subjective and not easily reached. Your time in business, your repeat clientele, future business on the books, corporate name, trade name, domain name, copyright, and reputation all contribute to this value.
WHOLE VALUE: Now add the sum of the parts.
"We offer our opinion only to assist you, should you require more
specific information, please consult your accountant, legal advisor,
or a real estate professional specializing in
the B&B Industry"
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