I don't think it's worth next to nothing, as you have stated. Granted, it's worth less than you bought it for.
But you are servicing a $400K debt out of the business for a start. Although that's a big cashflow drain, it's really a profit item as far as selling your business. Debt servicing is not a part of P&L in terms of figures for selling.
You are also drawing money out of it. Although you are working in the business, it is a benefit you are getting out of it. There is a demand for businesses where people want to "buy a job"- for possibly a better wage than they're getting now.
I know that you are putting your own money back into the business- subtract that from the previous two figures.
I'm sure there would be a reasonable, if not huge, positive balance.
Lets say the business is on the market for $300k for sake of the argument.
For an incoming purchaser who has to borrow money to buy, the probability is good that they will be borrowing the lot.
With the business now only turning over $570k, was paying myself a wage of $80k (split half with the wife) until July 1 this year, and has since been halved, and showing last 2 years fin years' losses of about $40k nett each year, and similar but less this last fin year due to reduced expense costs...the cost of finance will be a major figure to consider in whether to buy it....it certainly would be for me if I was looking at it.
It was when I was looking at it - cost of finance, cost of Manager, rent, outgoings and so on.
Based on this, the incoming purchaser - who will be a mechanic most likely - is going to see a picture of working for only an average wage at best - unless he sacks all the staff and does it on his own.
I did have an idea that my best mechanic who is really passionate about his craft might want to take it over. His skill is amazing, and he is a terrific asset to the business, but still a rough-around-the-edges-knock-about Aussie ocker.
Like so many of the industry; he's 40 years old and no money. Mechanics as a group are largely this way....spend all their wages on stupid things like grog, smokes, tatts, cars and god knows what else that keep them broke and without assets most of their lives.
So, I could offer him a Vendor finance deal, but I reckon I know what he'd say; "The business is making no money, I don't want it at that price" or; "I'll give you the price of the equipment and stock".
I could show him that he could pay himself a decent wage - but he already has that and no responsibility or worry (other than being laid-off, I guess), so why would he bother?
Even when I bought the place - when the figures were decent - there were no buyers. The place had been on the market for well over a year, and other places much cheaper had been - still are - as well.
I admire your enthusiasm Geoff, and really appreciate what you are trying to do for me here, and you may think I'm being totally negative and pessimistic, but I'm not....just realistic - given the factors I've explained.
And, as others have suggested - selling it for a song and walking away - is probably not even possible - let alone what I would want to do - and to do so would leave me still with the debt to pay back, and no means of a decent enough income to pay it back. There is still the overdraft, the investment loan, the IP loan, our Everyday LOC is pretty maxed out, the CC's are too... we have been pouring all we have into it to chugg along.
To sell for a song (which is all that will happen) would be loss of house and bankruptcy in no time at all, I'd say.
No choice but to tough it out and try to get through, or sell the PPoR if it gets to that point.
At the moment we are treading water fully clothed...but treading water nonetheless.
The wife is taking on as many evening shifts as we can all stand, and the IP might get a tenant soon, so there's that to help.
