I am thinking of making an offer for an established "business" if you can call it that.

It is just a website selling various e-books (electronic books)

He claims to have attained a sustainable profit of about £100.00 a week.

Now of course this in iteself is very small beer indeed.

But I have been looking for an entrance into this particualr area for some time, it will tie in very nicely with the website I have in mind that is going to concentrate on Electronic Publishing, every printer I have spoken to walks in dread of the e-book.

No distribution costs...extremely low replication costs etc

So I want to make this person a very serious offer.

The problem is...I don't know what to offer him.

Is there a business formula when it comes to purchasing a business?

Such as the offer is based upon a percentage of the profits of the business after overheads have been deducted?

I just wondered if there was some way...based upon established business practice, that I could arrive at a reasonable offer?

Thank you for any advice.

I don't think there's any set formula. Businesses are often valued on a multiple of their annual profit, but that multiple will vary from one discipline to another. Others might look at gross sales as a key factor. Here are some examples I found:

Travel agencies - .05 to .1 X annual gross sales
Ad agencies - .75 X annual gross sales
Retail businesses - .75 to 1.5 X annual net profit + inventory + equipment

Another way of looking at would be to try and evaluate what you think this e-book would be worth to you.

Maybe you should pay someone to start a quick survey on it's activity to calculate approximately what is really it's weekly income.You know it's better to check everything by ourself,dont thrust what a seller says to you..

Thanks for the advice! Did you palce you company in dormant status or did you have it stuck off?

With regards to the tax man, the company has not traded for a year now and therefore has had no ins or outs...what did you have to provide to get the tax man off your back?

Thanks.

100 dollars a week is a pretty small profit