How Much Are My FedEx Routes Worth?
These tips and notes will help you determine your FedEx routes worth.
The United States has always been the land of opportunity. Yet that does not mean running a small business in the USA does not come without its challenges. One such hurdle is conducting a small business valuation. This is often a major hurdle for anyone looking to buy or sell a business, and it applies to FedEx routes as well.
Depending on the state you are operating out of, and the geography of where your FedEx routes are located, there are many factors that determine a FedEx routes worth. For example, urban routes may deliver a bigger volume payday but come at the expense of higher wages.
If you are looking to deal with an experienced FedEx broker who understands all of the ins and outs of a FedEx routes worth and ownership, contact us here.
A great first step in understanding the open market value of your small business is to look at the profit and loss (P&L) statement. Basically, a spreadsheet listing your gross revenue minus expenses. You will want to highlight any of the expenses that are exclusively yours, meaning that they will not transfer over to a future owner. This could include a one-time expense, travel or even depreciation of vehicles and equipment.
A second step is to understand the following acronym EBITDA. It stands for “earnings before interest, taxes, depreciation and amortization.” It is often a strong indicator of a company’s financial performance.
EBITDA = Operating Profit + Depreciation Expense + Amortization Expense
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When it comes to FedEx routes worth, history shows that they generally sell between 2.5 to 3 times the free cash flow of the business — with many routes averaging approximately $40K in profits. There are many factors that go into a final valuation, including the fact that your business is truly worth as much as someone is willing to pay for it. It is also important to keep in mind that FedEx agreements last between 1 to 3 years and automatically renew unless there is written notice from either side.
Remember that buyers will need to set the FedEx business up as a corporation. Incorporating benefits such as insurance and retirement plans can be quite costly. For the most part, buying FexEx routes can be lucrative and rewarding, giving small business owners a practical and flexible way to operate independently.