Understanding the Value of Your Small Business
I’m always on the hunt for relevant info and I loved this - one of the best articles I’ve seen on this topic for a while. Here are a few paragraphs as a taster...
Putting a value on your small business can be tricky, but it is essential to know the true worth of your business in order to make an accurate exit plan.
Be prepared
Anyone interested in purchasing your business is going to want a valuation that is backed up by paperwork, so it’s important you have all your ducks in a row. Make sure all your business documents are organised and up to date. This includes cash flow statements, your profit and loss projections, annual turnover and any debts.
Benchmark your business
What would it cost you to open an identical business from scratch? Sometimes estimating the costs to start your business in the current market conditions can also give you a good idea of the value of your business. To calculate the cost, you’ll need to include buying equipment and tools, licences, permits, purchasing or leasing premises, buying stock, setting up online and social media, marketing and promotion, recruiting and training staff, staff wages and any product development… Phew!
Look to the future
Any prospective buyer is going to be most interested in the future earnings of your business. If you can give a buyer a clear idea of a secure financial return, then they are more likely to pay the asking price for your business. Examine your existing finances to look for any trends and forecast any future profits. You should also check industry indicators for predictions of how your business may do in the current/future market.
Pretty valuable stuff, I’m sure you’ll agree! Why not check out the whole article here and share your thoughts with me afterwards: call on (0467) 749 378 or email me at [email protected].
Thanks,