What is Your Business Worth?

What is Your Business Worth?

The first step in selling your business, is determining how much it is worth. Based on our experience, there are a number of key considerations to help you calculate it.

In order to determine the worth of a business, there are multiple factors to consider. It goes beyond how much money is made on an annual basis; all aspects of its past, present, and future are considered:

1.     It can seem daunting to try to calculate the value of your business by yourself. For this reason, a proper business valuation should be conducted by an experienced professional. This is the first step you will need to take when working towards selling your business.

2.     It is important to consider the future performance of your business. This may sound strange, but the truth is, your business’ value is as much dependent on projection, as it is on past performance. Even if a business has done well in the past, a potential buyer will want to feel confident it will continue to be successful well in the future. The current status of the company within the market, and what a new buyer can do with it, will affect how much a business is worth.

3.     Your next important factor is – obviously – around the business’ earnings and revenue. Although revenue is important, a business with greater earnings is considered more valuable. Buyers want a return on investment, preferably sooner rather than later. Therefore earnings rule.  However, to compare businesses, these earnings must be recast to reflect the true earnings capability of the business.

4.     Similarly, important are the types of assets owned by the business (i.e., industry-specific machinery, equipment, vehicles, etc.). The number and types of assets, influences the lender’s interest rates, and how quickly they are depreciated. This in turn impacts on the value of the business.

Transworld Business Advisors offers free business consultations for anyone looking to sell their business. We can help you agree on a marketing price for your business, based on a variety of methods and market data. Contact your local Transworld office to schedule an appointment; we will help reduce the stress and anxiety around determining your business’ worth and look to increase its value.

A skilled Transworld advisor will help you review your financials and guide you through the steps of preparing your business for sale. Our experienced brokers will build a relationship with you, in order to understand your business and help determine its value. You will be left with the ability to make an informed decision on whether you really are ready to sell.

Schedule your free consultation today!