| When setting out on the road to selling your | | | | obligated to use their services. However, with |
| business, the key factors that may or may not | | | | their vast experience and knowledge, they could |
| determine a quick sale is ultimately the price. For | | | | help you achieve your asking price a lot quicker |
| those new to buying or selling a business, the task | | | | which is good news for everyone. But first off, |
| of valuing something that is essentially an ever | | | | get your price right and ensure your expectations |
| evolving entity can be extremely difficult. Whether | | | | are realistic. |
| you are on the buying side of the fence or the | | | | In my experience, there are a number of ways |
| seller, you need to take a viewpoint from both | | | | to value a business. In most cases the net profit |
| sides to truly understand if an asking price is | | | | figure will be a good starter for a small to |
| realistic or how you go about negotiating a price | | | | medium sized enterprise however, this rule |
| that suits all parties. | | | | doesn't always fit every case. Financial data only |
| Each and every business is different and no doubt | | | | shows a fraction of what the company has to |
| in many if not most cases, every business for | | | | offer any potential investor because essentially, |
| sale has had it's ups and downs, not to mention a | | | | your business may be where it is today by having |
| few undisclosed secrets. As a seller, you want to | | | | a great team, great products or amazing |
| get the best price you possibly can - this is | | | | customer service. Never underestimate the |
| obvious. As a buyer, you want to ensure that the | | | | power of people when considering the value of |
| offer you make is credible and will gain a return. | | | | any business. |
| Anything less would be deemed as a disaster. | | | | Don't get greedy though. I have seen so many |
| In this blog, we will concentrate solely on the | | | | fledgling businesses hastily put up for sale at |
| sellers point of view on valuing a business for sale. | | | | ridiculous figures because the owner decided that |
| When you decide to put your business on the | | | | it wasn't for them anymore. A small business with |
| market, not only do you want to ensure that you | | | | limited trading history, barely making any money |
| get a good fee for the business, you need to | | | | asking for 5-6 figures! It happens and it happens a |
| ideally walk away feeling that your hard work, | | | | lot. If you have invested several thousand into |
| time and capital invested was worth while. Sadly | | | | getting your business started, think about firstly |
| though, many businesses are sold under | | | | seeing what that investment is now worth. Has it |
| circumstances that simply don't allow this to | | | | grown or has it disappeared into an expensive |
| happen. In such cases, a fire sale or quick sale | | | | black hole? If its the former, you potentially have |
| could be the best way out to relieve you of the | | | | a great business for a future investor. If it's the |
| burden. But that's another story entirely... | | | | latter, you need to make some tough decisions |
| One of the most cost effective ways of getting | | | | on the valuation - and most likely you won't like |
| a good idea of your businesses value is to speak | | | | them! |
| to a broker or business transfer agent. In most | | | | Remember though, when selling anything in life |
| cases, agents will come to see you for an initial | | | | whether it's your house, car, second hand |
| fee-free consultation and will discuss your business | | | | computer on eBay or your business, the price can |
| and what you are essentially selling. Best of all, | | | | always come down but rarely does it go up. Think |
| they will in many cases give you a reasonably | | | | of one simple rule... "if I were buying this business |
| good idea of the value of your business. This is | | | | today, what would I be happy to pay?" Be |
| usually achieved however, by having sight of your | | | | brutally honest to yourself. You'll no doubt find |
| accounts. So make sure you have these ready to | | | | that you arrive at a figure that you are satisfied |
| present! Most agents will want to see the bottom | | | | with and most prospective buyers will be happy |
| line e.g your net profit. If your business is making | | | | to negotiate around. But before you take that |
| money, it will no doubt have some value. If it is | | | | leap and advertise your business for sale at that |
| making a loss, the process of valuing the assets | | | | price, speak to the people that matter. Your |
| and the goodwill (if you have any) could be a little | | | | business partners, investors, accountants, lawyers |
| bumpy. | | | | and agents. If they agree, you're probably on the |
| You will however, do yourself little harm by | | | | right road to a successful sale price. |
| speaking to a broker. In most cases you are not | | | | |