Trying to understand just how much your business is worth on any given day can be difficult. Owning a business doesn’t mean a person has a grip on actual valuation of a business. This is because a business’s worth is based on a variety of factors including assets, liabilities, potential growth and market conditions, to name a few. So in short, that’s totally normal not to have an accurate number, but rather a range, of what a business might be worth.
For those looking to sell a business, they would prefer their business to be valued at the top of the range, in hopes of getting top dollar for the business they built. Timing is everything when it comes to selling a business as external factors, outside of owner control, can greatly impact the sale of a business. However, since these factors can’t always be controlled, it is important to get top dollar when selling a business. Of course, the buyer would rather get a bargain so negotiations often take place between buyer and seller until a deal is struck that benefits both parties.
Selling a small business can take time, especially depending on the market the business is in. Buying a business includes buying liabilities as well as assets so a person would have to come in prepared to make an offer that is appropriate. Many small business owners have put much time and effort and often started from nothing to build their business. This can lead to much sentimental value, but if a person is serious about the sale of a business, they should try to put that aside and look at it from a black and white perspective in order to understand the potential sale better.
Employees can be an invaluable part of the equation too as they shouldn’t be discounted as a huge asset to the potential buyer. A well-trained employee can be key to a business’s success and be as valuable to it as an expensive piece of equipment. With the sale of a business, there are a lot of angles to consider. Also consider that you may receive offers below asking that could potentially be negotiated to an agreeable number for both parties involved.
Source: FindLaw, “How and When to Sell a Business,” accessed on Sept. 25, 2017