What is Your Business Really Worth

How do you arrive at a true value for your business?

Financial statements and their meanings have to be looked at in detail because it is important to be clear on the past performance and future potential of the business. Make sure you have considered all areas when arriving at your own conclusion of the value of the business.

Check these over with your advisers and, if necessary, ask the seller further questions. Be clear on all outstanding issues before finalising a deal.

Most business owners will always feel that their business is worth more than the buyer believes it is worth. It is important that the price is fair and correct for everyone concerned.

This fair value will relate back to the profitability and potential of the business.

Some business owners will purposely set a high price because they think they can drop the price later on. This is not always good, because the longer the business is advertised in the papers, the less interesting it will be to other buyers.

People will perceive there must be something wrong with the business; otherwise it would have sold long ago. At the end of the day, the market determines the price the business is sold for because the true price is always what a buyer is prepared to pay.

What is the final price? This is the question that is always the biggest problem for all parties. The owner of the business should first obtain a business appraisal from a loca, experienced business broker.

If the valuation is inadequate or doesn't satisfy the owner, a professional valuation from a local accountant or business valuer can be obtained. Whatever happens, it is wise to set a fair price so that both parties are happy with the deal.

© 2005 StartRunGrow

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