subject: Determining the Value of a Small Business [print this page] Determining the Value of a Small Business
It is generally a challenge to practice detachment from your business in order to evaluate it objectively, but this is exactly what is recommended in order to determine its market value. Without using this approach, most people looking to sell their businesses fall into the trap of overpricing them which can have the undesired effect of inviting a tedious level of scrutiny on the part of the buyer, as well as the business being on the market for much longer than they'd like.
If objectivity is beyond your grasp, you may want to look into hiring an outside professional. A business financial analyst can help you figure the realistic worth of your business and end saving you many times more than the upfront investment of hiring them. Another tool available to the small business owner to determine the realistic market value for their business for sale is the business profitability calculator. It is essentially a research tool meant to be used by the business community to provide small business buyers and sellers with an inside view of the potential deal.
Once the asking price has been established and you're ready to put your business on the market, there are a few other things you can do to increase your professional image and decrease the chances of squirming in the face of scrutiny. You can expect a potential buyer to want to see a business plan, balance sheets, profit and loss statements, and a list of your clientel. Having an agreement prepared and reviewed by an attorney for both buyer and seller to sign will put you in position to seal the deal as soon as an interested buyer is ready. It will show that you are organized and prepared and give the buyer one less reason to delay the decision to buy your business.
