How to value the worth of your business
Ask FSB’s experts have some surprising advice about how to determine your businesses’ value. Have you had to value yours? How did you go about it?
Comment
Email
RSS
Diggvaluation is in direct proportion to the buyer’s estimate of return on investment with the purchase price of a profitable business being recovered by earnings in a 3-7 year period depending on the business and nice.
A key factor in most deals is the fair market value of hard assets. For an IT business you may have some receivables, software, equipment and if you have developed proprietary systems that are trademarked then those are a bonus if they are, in fact, valuable to the marketplace as evidence by installed sales.
If I were buying your business I would look carefully at the niche markets you serve and the competition. I would also want to know the turnover rate of your number one asset which of course is your staff. The skill sets of your professionals would be of great interest since I would need to evaluate how difficult it would be to replace them as some of them would leave.
I would want to be very clear how services are marketed. For example if business has been developed by the relationships of the current owners with a handful of key clients, that would affect my view of value. I might want to cushion that with part of the purchase price in escrow to be released with an agreed upon transition plan.
Ultimately a buyer is buying a book of business that needs to be replenished as projects are finished. If I felt very confident in replenishing that business and growing the portfolio, that would influence how much I would be willing to pay.
If you are intent on selling your business you should have a very realistic picture of the risk associated with the deal from a buyer’s perspective. Once you have the benefit and risks well defined, you are in a better position to identify who might be interested in buying that picture.
Hope this helps
Steve Pohlit
http://www.asktheconsultant.biz
Features-
Should you use carrots - and sticks - to nudge your employees toward better health? more -
An entrepreneur says he's found an endless source of cheap energy. Trouble is, it violates the laws of quantum physics. more -
Six are dead in Kentucky. Should business owners have the right to ban guns from the workplace? more -
These five next-generation green vehicles will be faster, more powerful - and cheaper. more -
A small U.S. tour business sends animal lovers into the bush to help threatened species. more -
A rural indie channel is paying $25 million to pair the shock jock's chatter with tractor pulls and Christian cowboys. more
Before calling in someone to value your business,clear off the books of any dead-stock merchandise. This will show a higher stock to selling ratio and increase the value of the business.
JMHO
http://www.sellmyinventory.com