When looking to sell your business, you first need to figure out your company valuation so you know what is fair when it comes to a price. You can determine the value of your business using these three approaches: by comparison to recent sales of similar businesses; based on the business’ earning power and risk assessment; or based on the company’s assets.
The use of business valuation tools is also essential. The two key starting points toward establishing your business worth with business valuation tools are determining why you need business valuation, and assembling all the required information. To do a proper job of valuing a small business, you should have three to five years’ worth of historic income statements and balance sheets available, which also shows perspective buyers that you have been running a tight ship henceforth.
Some businesses, upon enlisting a business valuation service, are very surprised to find that their business is valued lower than they would have expected it to be. However, this is in some ways good news, because if your business’s valuation wasn’t a number that you are happy with, you can either take steps to increase it prior to a sale or make another important financial move, like a merger or transition.
By using the earnings multiplier valuation method and documenting several years’ worth of profits and other positive cash flow, you can substantially drive up the value of your company, especially because your prospective buyers see proven profitability and future earnings potential as the most attractive traits of a business.
Another good strategy that can be used to improve business value is basic organization. By carefully maintaining financial records, documenting employee policies, and maintaining a safe and clean facility, you will automatically make your business seem streamlined and ready for someone else to take the helm.
Seller financing could also have a large impact on improving value, since it creates a greater incentive for buyers, especially in particularly tight credit markets. In a tough lending environment, seller financing has, in many ways, become an essential tool for completing many sales.
In the end, the truth of the matter is that business leaders who are seeking to improve the value of their businesses should enlist in the help of a professional business appraiser, one who really understands how much your business is worth and how to raise those numbers. canada goose sale canada goose sale canada goose sale