The average UK small business is worth £90,000 in 2017, down £4,000 on 2016.
Using data from nearly 7,500 small business valuations performed over the last three years, online business transfer agent Bizdaq found that the average value of a typical British cafe had dropped in value by 15% to £45,000 in 2017, whilst coffee shops had risen in value – from £62,000 to £65,000.
They found that although small businesses are worth more than they were in 2015 (£89,000), values have dropped compared to last year. As values are directly linked to turnover and net profit, this signals that falling levels of consumer spending, and/or increasing costs, are adversely affecting the values of small businesses across the country.
The average value of a small business in the capital dropped by £20,000 in the last twelve months – falling from £115,000 in 2016 to just £95,000 in 2017. This drop is five times higher than the £4,000 drop seen around the rest of the country.
This drop can be seen in two of London’s most prominent small business types: coffee shops and restaurants.
The value of a London coffee shop has seen a severe drop, falling by almost a third, from an average value of £92,000 to just £62,000 in a year, whilst restaurant values have dropped by £43,000.
Bizdaq's CEO Sean Mallon said, “It’s frustrating to see that small businesses are reducing in value across the UK, leaving the nation’s small business owners with diminishing levels of return on their hard work and investment. In a period of economic uncertainty however, this is not unexpected. It’s interesting to see the differing values from region to region, and surprising how only short geographical boundaries can make a large difference to a business’ value. London in particular has seen a dramatic swing in values over the past year.
“A business’ value is in many instances tied to revenues, and particularly profit, so falling values may be indicative of a fall in these across the board, with a recent rise in interest rates putting further strain on the UK’s small businesses. Profitability decreases in a small business is often attributed to an increase in its variable costs, such a business rates or utilities. With this being the case, I would urge the government to work harder to relieve the strain on small business owners and allow them to make a fair return on their hard work. This should include allowing them to protect their investments through tax allowances when exiting their small business.”
Photo credit: Market-Inspector
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