What is Your Business Worth?

Occasionally, Sellers have an idea in their mind as to how much they should ask for their business. Their CPA, friend or Realtor may have offered suggestions. They may have heard of a business sale that they use to benchmark the value of their business. However, behind the scenes, there is a lot to uncover before settling on one example of a sold business or considering a gut level suggestion from an advisor that is not trained in business valuation.

One option is to obtain an outside valuation which can cost up to $5,000.00 depending on the business. Sometimes these valuations are theoretical and not a Market Price Analysis.

Results from Pricing

• - Under priced businesses may result in a fast sale while leaving money on the table
• - Reasonably priced businesses achieve a win-win and a fair transfer of ownership from the Seller to the Buyer
• - Overpriced businesses stay listed longer and help sell reasonably priced businesses of the same type
  

A business owner needs to understand that a business broker is valuing the business logically and realistically based upon past sales and experience. A well trained business broker has multiple valuation methods to apply depending on the type of business. First Choice Business Brokers has developed a valuation methodology called a Market Price Analysis (MPA). Various factors such as income trends, owner involvement, size of business and quality of record-keeping all overlay on top of these valuation methods to refine the valuation results. 

The art of valuing a business is just that, it is an art and not a science. A business sells for what a willing buyer will pay and what a willing seller will accept. For more information on how a business is valued in line with the market and what Buyers look for and value in businesses, contact a full-time business broker.