Serving Northwest Florida Families For More Than 20 Years

Important considerations when pricing your business for sale

On Behalf of | Dec 27, 2019 | Uncategorized |

There are many different reasons why people choose to start their own businesses. Some people want the ideal life of being their own boss, which means that they plan to run the business until they retire. Other people want to take an idea or concept and find a way to market it for profit.

Sometimes, the profit can come from running the business, but the potential is there to make good money by selling an established business once you prove that the concept works. The sale of your business can provide you with a large amount of money for retirement or your next business venture. In some cases, it can also provide residual income, depending on the structure of the company and the nature of the goods or services that you provide.

The key to a quick, successful sale for any high-price item is always ensuring that the asking cost accurately reflects the value in the item for sale. You want to maximize the asking price without exceeding what potential buyers will perceive as reasonable. Putting a price on your business means doing some careful math.

Determine the value of your existing assets and facilities

Depending on what you do, your business could have assets ranging from substantial real estate holdings to expensive machinery. You need to find the current fair market value for all of the equipment, property, supplies and inventory your business currently owns.

In some cases, such as vehicles or machinery, you may need to consider depreciation when pricing the items. Even the experience and training of the staff you employ could influence the value of the business. Creating a thorough inventory with transparent pricing for your assets will make it easier for potential buyers to make an informed decision about your business.

Show how your company has grown and how it will continue to grow

Tracking revenue and profit over the life of your business and showing how trends will likely continue in the future can give a potential buyer an idea of the financial value your business represents. Creating a discounted cash-flow analysis helps place current income for the company in the context of likely future financial circumstances, including adjustments for inflation.

By laying out the potential revenue for the business and therefore the income for the new owner, you can help someone justify the massive expense involved in purchasing a company instead of building their own.

The value of an established and trusted brand cannot be overstated when it comes to establishing oneself in a local market. Your company is likely worth more than the mere sum of its parts. Between the staff, the established reputation and the fact that you’re already turning a profit, your business has a lot to offer an investor interested in your market niche.

FindLaw Network