To determine the worth of a business, one must consider a few factors. For one, a business is only as valuable as its ability to provide an income in the future for a buyer. Other factors like what equipment does the business own; what is its inventory; profitability trends matter as well? Market comparables will also be important in understanding what your business may ultimately sell for.

Next, a good set of books not only helps determine where the value lies but makes a business more valuable, in general. A valuable business is one that can accurately inform a potential buyer how profitable it is and has been at any given time and how it will perform in the future.

Additionally, revenue is a good lead measure of a business’s worth but not the most black and white. If a business has gross revenues of $500,000 per year, however, if its expenses are $495,000 to keep a business afloat, then $5,000 net profit it is not a highly valuable business. This is why any broker would seek to adjust your profit and loss statement in order to understand true earnings and other factors to determine valuation.

Once each of these elements is estimated, then intangible assets may either have an upward or downward pressure on the market value. For instance: location, economic conditions, competition, goodwill, lease terms, and customer loyalty and diversification can add or subtract from value.

In essence, a business’s worth is a combination of its earnings and its good standing in the community. Although there is no simple answer to valuing a business, our Business Advisor can help you understand your business’s potential market value.

There are a number of reasons why you might want to sell your small business. Whether the decision comes easily or not, it is still a significant one to make. The reasons may range from either the desire for new entrepreneurial opportunities or retirement being around the corner – whatever it is, there is no right or wrong reason to sell your business. In fact, sometimes the best thing you can do for yourself and your business is to let it go. New management just might be able to take it to new heights, freeing up your time to rest or seek new investments.

There are five main reasons why you should sell your business, consider these.

Retirement: Your business is successful and it might be time for you to finally rest and enjoy the fruits of your labor. The thing is, even though you are done building doesn’t mean your business is done growing. By selling your business, it can continue to prosper and thrive even after you are gone.

Burnout: Much like retirement, burnout may hit you suddenly. Unlike retirement, however, burnout is not an indication to take it easy or slow things down. This symptom can be directly linked to the business itself. If you are no longer passionate about your business, here is the opportunity to embark on new endeavors to reignite your inner entrepreneurial fire.

New Opportunities: If new opportunities are knocking on your door, you likely need the financial means to pursue them. The quickest, easiest, and the savviest way to pursue these opportunities might be to sell your current business. This is an excellent reason to hand your business over to new management and get a fresh start elsewhere.

Buyer’s Market: When the economy is doing well – much like it is now – and consumers have expendable cash to spend, investors are more interested in buying new businesses. If it appears to be a seller’s market, it just might be time to finally list your business for sale.

Fear of Risks: A really common, but difficult to identify sign that it is time to sell, is when you become more risk-averse. This essentially means that you are less willing to make risky decisions, which can be detrimental to your business’s growth and profit. Your business may begin to decline for no reason besides your managerial decisions. When this occurs, the wisest (although hardest) thing to do for your business is to sell.

Still not sure if it’s time to sell your business? An expert from Acquisitions can help you reach the best decision by listening objectively as you discuss the reasons why you might be ready to sell.

Finding out the worth of your business is the first step toward preparing it for a sale. Our Acquisition Advisors offer a free business valuation, which can shine a light on where your business stands. Your business broker will assess the following to find the value:

- Net profit

- Business model

- Growth trend

- Competitors

- Company assets

- Customer retention and loyalty

- Age of business

There are two commonly used benchmarks to calculate a business’s worth: Compare the sale price of a similar business to 1) your company’s annual sales resulting in a percentage of sold price vs sales or 2) annual recast profits resulting in a multiple of earnings. Our business value calculator program can then generate a report that can be reviewed.

It is impossible to do a thorough and accurate business valuation without keeping in mind the current market, its trends, and all other assets owned by the business. For instance, trademarks, furniture, commercial real estate, patented technology, computers, and other equipment. In fact, even intangible assets like public perception and public brand awareness come into play when ultimately determining the value of your business. To properly give value to these intangible assets, you should speak to your Acquisition Advisor, who has experience in this area.

A business broker, on top of helping you find the value of your business, can help you maximize its worth. For one, business brokers know what buyers are willing to pay, what they are looking for, and how they like the information presented to them. Our brokers can help you determine what your company is worth, and then they can help you sell it to the best possible buyer.

There are five simple, yet important, steps to consider when selling your business:

Organizing Financial Documents: Well-organized books, balance sheet, and a clear outline of all assets will not only streamline the valuation process but will also make your business more appealing to potential buyers. Therefore, before listing, make sure all of your financial documents are in order.

Understanding Market Value: In order to list your business, you must first understand business valuation. What sets your business apart? What makes it profitable? What have other businesses like yours sold for with similar revenues and profits? Not only are these details important for determining what your business is worth, but essential to the success of your sale process.

Exit Strategy: It is important to plan an exit strategy even before you believe you might want to sell. The unexpected can occur and having a solid plan can ease the process of listing and selling. For instance, a business owner may become ill, lose interest, or maybe the hopes of passing the business along are unlikely as your children have passions in different careers. Therefore, a well-planned exit strategy can make the process of selling down the road much less stressful.

Boosting Revenue and Sales: The best time to sell your business is when your sales are at their best. You would be hard-pressed to find a buyer willing to take a shaky business off your hands. If sales are declining, you should avoid listing your business. If you are hoping to sell soon but have had trouble boosting sales, consider speaking with your broker about marketing methods to help increase attraction and customer retention.

Business Broker: Our Acquisition Advisors are not only equipped in both the buying and selling process but have specific expertise in most industries. Therefore, they are not only interested in helping you sell your business quickly and at the best price, but they have the tools to do so. Not only will they help ease the process with professionalism and experience, but we also have a network of interested buyers ready to make an offer on your business.

The thought of selling your business to a competitor can seem daunting. However, it is not uncommon and certainly not impossible. There are 6 major tips for successfully doing so.

1. Do not turn over confidential information too soon.

A nondisclosure agreement (NDA) is critical during any sale but especially when selling to a competitor. A potential buyer should never have access to trade secrets and other confidential information until the right time. When a competitor shows interest, request an NDA be signed, in addition to having them work through an intermediary.

2. The best advice is to hire an intermediary

An experienced broker, such as our Acquisition Advisors, helps navigate a very tricky sale fraught with danger to a competitor. You will need an attorney as well to make sure the business sale has the proper structure and protections throughout the process.

3. Determine your business’s value

The first step to selling your business to anyone is determining your business’s worth. Once you have done so, you can choose a listing price that is both competitive and within market standards. When selling to a competitor, they will likely know what fair and competitive pricing is, therefore they may not be the best buyer in the end as they may not need all of the assets you have to sell.

4. Remove emotion from the equation

Essentially, do not let instinctive distrust interfere with a potentially successful business deal. If the sale goes through, someone who was once your competitor could become your best friend in business.

5. Do not hesitate to ask questions

There is no harm or unprofessionalism in asking all of your questions. For one, it is completely reasonable to wonder where their true interest lies. Are they hoping to expand their existing business? What are their plans for your business? Before you sign on the dotted line, it is still your company and what happens to it is your business.

6. Do not lose focus on your business and employees

Any deal and its corresponding negotiations can take much of your time, do not lose sight of what is critically important – your business and employees. A company is only as valuable as its latest earnings, which means it requires your attention to continue driving up revenue.

Finding a buyer can be easy, but finding the RIGHT buyer can be a little more difficult. There are three simple steps you can follow to ensure you find a buyer that is perfect for your business. No matter what, however, the best way to sell your business is to follow the advice and guidance of an expert business broker.

Our advisors have a full network of vetted buyers, who can be filtered by what your specific needs are. But first, get a formal valuation. A good potential buyer is going to ask for one. They want to know what your business is worth. A cautious buyer is not going to simply take your word for it, they want to know your asking price is not too low or too high – because either extreme is a red flag.

Secondly, it is important to spread the word. Although you do not want to alert employees or competitive businesses, you want to let your close acquaintances and business contacts know. These are the individuals who are familiar with your industry and can steer you in the right direction. Not to mention, your business partner might be willing to buy you out or a business contact may have someone in mind who is looking to invest. The possibilities are endless.

Finally, it is time to advertise. This is where the network comes in handy. By listing your business in this network, your listing is going out to our list of vetted investors. You will be listed by industry and cost – revealing just enough information to peak the interest of a worthy potential buyer.

During the entire process, take the guidance of the professionals who undergo these business deals every day. Hire a business broker to ensure a smooth selling process.

Selling your business share to a partner is actually one of the most common ownership transfers among small businesses. This is mainly due to the fact that your business partner is already invested in the business, knows the books, and has a clear understanding of the business’s potential for success.

A business partner is someone who, like you, would want the legal transaction to be as smooth and seamless as possible. It is a negotiation without disagreements or concerns, and can actually be painless for both of you. The best thing to do is sign a “Buy-Sell Agreement” (also known as a Buyout Agreement) when the partnership begins. Why? Well, the primary purpose of this legal agreement is to outline the procedure for transferring ownership, the price, and the purchasing terms between partners. This way, both of you are protected from an emotional selling process at some point in the future.

In the Buy-Sell Agreement process, both parties agree on the basis for measuring the value of the business. This guarantees that no seller feels that the partner is increasing the cost in order to make a greater profit from the one attempting to leave. This arrangement benefits both parties and prevents any nasty disagreements or issues down the line. In addition, there is a security clause requirement for the departing partner to sign a confidentiality, non-compete and/or anti-solicitation agreement. This protects the remaining business partner from releasing someone with trade secrets into the hands of the competition.

To sell your share of the business, be sure to have a Buy-Sell Agreement ready and the good counsel of a business broker such as the knowledgeable team at Capital Asset Acquisitions. With this combination in place, the process can be quick and seamless.

Selling your business does not need to be a long, difficult or tedious process. With these eight simple steps, you can be on your way to selling your business quickly.

Hire a business broker: Hiring a business broker should be the first thing you do. An advisor will guide you during the entire process. Consider an experienced advisor from Capital Asset Acquisitions.

Conduct a business valuation and determine what your business is worth: A business is often worth a certain multiple of its profit. That said, there are numerous ways to perform a business valuation. A business broker can help you determine the right equation and process to value your specific business.

Prepare and organize your financials: A buyer will want to take a look at your financials – they cannot just take your word for it. Because of that, you need to preemptively organize your financials.

Draft an executive summary of your business: This is a document that outlines what your business is, the important financials to note, and answers some frequently asked questions.

Put your business on the market: Your business broker can help list your business in the right channels to attract the right buyers.

Vet offers from potential buyers: As you receive offers, it is important to sift through them in order to determine which is the best to begin the negotiation process.

Let the potential buyer vet you: After you have begun the negotiation process, a buyer needs anywhere from 60-120 days to verify your financial documents and review the contract with their broker and lawyer.

Close the deal: Finally, it is time to sign on the dotted line!

The value of a business is determined by several factors, therefore, there is no one exact science for increasing it. Of course, that also means that each individual business can find methods of increasing its worth that may look different from the competition.

That being said, to increase the value of your business, consider what you like best about your favorite brands. What comes to mind? Great customer service? Top-quality products? Convenience? This is true across the board. The best way to increase the value of your business is to put the customer first – regardless of your industry. When making decisions on services/products, store or online experiences, and the associates you hire to manage the day-to-day, consider the customer above all else.

A happy customer is one who is treated well, can easily find what they need, and keeps coming back for more because the product or service is that good. Yes, it is that simple – and this will increase the value of your business. Never compromise on quality to save on overhead costs. You must invest in what matters, to profit greater in the long run. Quality products and services, a pristine storefront or office, and happy staff that are like family will all make your business more valuable.

When calculating the value of a business, yes, profits and cash flow are major components. However, what many may not realize is that “goodwill” is just as important as bottom lines. A buyer is going to be interested in investing in a business that will have a quick return – one that already has a strong customer base and loyalty.

If you need guidance from an experienced business advisor as to how you can increase the value of your business, do not hesitate to contact us.

The value of a business is determined by many factors including tangible and intangible assets. For example, profits and intellectual property matter as much as good reviews and customer loyalty. In the same way that having strong financials and returning customers can help your business, disorganized financials and displeased customers can decrease your business’s worth.

In other words, what can help your business can also hurt your business, depending on how it is managed. Prioritizing employee morale and customer satisfaction can make a significant difference in how your business is literally valued, and “valued” by potential buyers.

To start, make sure your books are clean. Do not wait until you are ready to sell to focus on your financial statements, balance sheets, and other documentation. Not only will this make selling easier when the time comes, but it will also help you while you are still in management. Understanding your books can help you make your business more profitable; consider the following questions, for example.

- What aspects of your business are leaching money?

- Which products don’t sell as well versus what is flying off the shelf week after week?

- Which services are sought out by clients the most?

- What overhead costs can be decreased?

- How and where can you be more sustainable and cost-efficient?

The answers to all of these questions (and more) can both increase the value of your business value or decrease it. In essence, it is important to manage your business well if you hope to have a business that is worth what you hope to sell it for. If you are unsure of where to start as it is understandably a potentially daunting process, contact a business advisor who can simplify it and guide you through it.