>>3432000 LB
The evaluation of buy a business is based on the net profit of the business be it 400 or 100. The loan will almost always be 10 years on a business loan, the property loan will vary. I would rather buy a 400 one if the net was 200 and the 100 was just 50 (unless I had a great idea to make the 100 one increase net to 100 or 150 quickly).
The reason for that is likelihood of default and failure is higher for a 100,000 business than a larger grossing one. The interest rates probably also vary with different types of businesses - ie restaurants verses dentists.
The price of a business has absolutely nothing to do with interest rates!!
The value of a business only has to do with the net profit of the business! Even the equipment of the business is basically negligible.
NO
Wrong
There are many business with great cash flow but without profit the business is worthless. Go ahead and try and retire or cash flow - dare you.
No one pays cash to buy a solid business. For cash flow you borrow 3 months of costs if needed for the difficult first year. Then deduct the interest. The harder time financially is the point you are paying a lot more in equity than interest and not getting the tax deduction. This decreases your take home due to tax burden; but by then business growth should off set that.
Well that is true you have to have cash flow - but the value of the business is not in the cash flow. Cash flow is needed to maintain the business.