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What Is My Business Worth?

Contact VR Business Brokers (954) 565-1555

Although the value of a business depends on a variety of factors, the best determinant of price is what buyers are willing to pay for it! Because buyers pay for opportunity, the buyer who perceives the greatest opportunity is the buyer willing to pay the most for your business.

To give you a better idea of the true value of your business, consider some of the following pricing approaches:

Asset-Based Approach: This totals up the value of all of the assets, starting with tangible ones (such as furniture and equipment) and intangible ones (such as trademarks or copyrights or other forms of intellectual property). This approach usually uses your assets' resale value, not how much it would cost to replace them. Consider the question, “What would be the cost of creating another business like this one, which could produce the same benefits for its' owners?”

Income Valuation Approach: Once you have determined the value of what your business has, you can begin determining what your business makes. This involves taking a look at the business’s realistic revenue projections. It is necessary to objectively analyze your financials in order to determine what a buyer can expect to make as a result of purchasing your business. Consider the question, "What kind of return can the buyer expect?"    

Market Approach: To get a general idea of the market value of your business, you may want to look at the overall industry in which you are operating and the selling price of similar businesses.  Look for industry formulas and capitalization rates used to come up with a multiple of earnings for businesses operating in your industry. However, because small businesses tend to be unique, you may have a hard time finding a recently sold business whose location, sales volume, number of employees, and other factors are the same as yours. Consider the question, “What are other businesses worth that are similar to my business?”

The true value of your business is highly dependent upon many factors, from the economy to your financial statements. For this reason, it can be very difficult for a business owner to not only come up with an accurate price for their business, but to come up with this price without letting their emotions get in the way. Although you may want to receive as high of a price for your business as possible, it is important that you remain realistic in your approach, as buyers will also want to buy your business for the lowest price possible. The importance of using a third party such as VR Business Brokers when selling your business is invaluable – we will be able to determine an accurate selling price, ensuring you will receive maximum compensation for all the hard work you’ve put into building your business.

The first step in selling your business is understanding what it is worth; VR Business Brokers can assist you with a most probable selling price assessment, helping you maximize the value of your business to ensure a top selling price. 

Contact us today to find out how you can increase the value of your business to prepare it for a successful sale.  
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