How much is my business worth?
This is a great question and a lot of people think there is a simple “how much is my business worth calculator” and the truth is it would be an absolute crime to valuate your business based on the numbers alone. There are many factors to take into consideration when you want to determine the real-world value of a company.
The first thing that comes to mind for me is goodwill, and no I am not talking about the store. I am talking about the store. Goodwill is the parts of your company you can’t put your hands on. Chances are goodwill is the best part of the company. It’s the brand you have established, the reputation you have earned in your industry, and the customer base that came with those efforts. There is no simple calculator that can determine this. it takes careful market research and competitor analysis to put an estimate on the real value of your business’s goodwill.
Next, let’s talk about business assets. This can be everything from equipment to vehicles and even your inventory. Generally speaking, determining the value of vehicles and equipment is fairly straightforward. In some cases, the equipment can be specialized or industry-specific and will take a little more research to get an accurate value. Inventory has two values associated with it, what it costs, and what it sells for. In most cases, its retail as sold value is what is used.
Location is everything! If you are lucky enough to own the real estate your business is located in you are at a great advantage. Not only do you have the equity of the property itself but you also have a solid reliable location for your business and that absolutely contributes to a higher selling price in most industries. Keep in mind not everyone sells real estate when they sell a business. In many cases, ownership of the property is maintained and the property is leased to the new business owner producing another income stream for you.
By the numbers… The first thing most potential business buyers will ask for is going to be the numbers. You will see terms like Gross Revenue, Cashflow, and EBITDA among others. Essentially, the financial health of the business you want to sell will be a critical part of determining how much your business is worth. This is when not avoiding taxes and hiding income will pay dividends. Taxes paid come from profits earned, and profits earned lead to higher sales prices for a company. Before we or anyone else can effectively help you determine the value of your company the books and taxes need to be in order. We have a CPA on our team that will be happy to help you with this task and make sure that your business’s financial health is accurately represented when the selling price is determined.
If you want to dive deeper into this let’s chat. We offer an absolutely free consultation and business valuation. Reach out and take that first step today.