Computing the Value of Your Business for Sale

By on June 28, 2013

11310676112_fansstuff5619.jpgIf you are thinking of putting up your business for sale, one of the many things you will have to consider is how you will value your business. Of course, it is not ideal that you just come up with a number that you will be using as the price of your business. This is where many people go wrong. They think that they can easily put a price on their business, however they want it. As a result, they are unable to sell their business because investors will feel this is something that needs to be discussed more intently.

Aside from putting a wrong price in your business for sale, there are some who are afraid of coming up with a price they can give interested investors. This is because they think they are not in the right position to give out a price that will be right for their business. For this reason, they rely on their broker or seller to make an estimate.

However, it is important that you are also able to value your business. You will need to know how much the current value of your business is by identifying how much its ability to produce income is. The best way to value your business for sale is by doing the following:

The first thing you need to do in valuing your business is to add up your assets. If you don’t know what assets are, these are items that have some sort of value; whether it is cash, patent, property, or trademark. You have to add the value of your existing inventories and equipment to the list as well.
Don’t forget to add the value of your intangible assets to the list. This will include your industry reputation as well as your business location.
To value your business for sale, you will also have to ask for an additional amount of money from the total sum of the assets you have computed for. Get a figure or a percentage of how much you would like to get paid for the business. This amount should be above the valuation of your asset. The combination of your extra profit and your assets should be your asking price for your business for sale.
If you have a broker who is helping you advertise your business for sale, you need to add another 10% on your asking price. This 10% will be paid to your broker’s fee for the help he will provide you.

By knowing how you can properly compute for the value of your business for sale, you can easily come up with its fair market value. This will allow you to get more interested investors, especially if the price is just right.

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