Importance of Business Valuation While Selling your Business

Establishing and growing a business in the cutthroat market of the United States can be an uphill battle for an entrepreneur. Everyone knows that ther

  • Importance of Business Valuation While Selling your Business
    Mervin Wright' Image Mervin Wright

    Importance of Business Valuation While Selling your Business

    • Tuesday 30th of October 2018
    • Selling

    Establishing and growing a business in the cutthroat market of the United States can be an uphill battle for an entrepreneur. Everyone knows that there are no shortcuts to becoming a thriving business owner. The success comes only when you deeply understand the different dynamics of economic conditions and changing marketing trends.

    But many business owners sell their company due to some personal or financial reasons. It can be a distressful and challenging phase for those who have entrenched their business with sweat and blood and now selling it on the open market. However, you can get the most of your business by knowing its real value.

    Being an entrepreneur, you should know the valuation of your business so that you can sell it to the potential buyer at the best price. Though business valuation is one of the most overlooked processes, it plays a key role in revealing the right value for your business – which is important while selling a business. Since there are hundreds of businesses for sale in the United States, make sure you give your business better visibility in front of aspiring business buyers.

    What is Business Valuation?

    Whether you are setting up a company from scratch or buying a business for sale in the United States, make sure you properly assess the value of your business. This will help you know the facts and figures related to the actual worth of your business in terms of asset values, revenues and market competition.

    Business valuation also helps those who need debt or equity funds for expansion or due to cash flow issues. Mostly, investors and financiers want to see the real worth of your business in the current market before pouring funds into your project. It is always recommended to hire highly professional and trusted valuation expert who has years of experience in valuing all types of business and industries.

    Importance Of Business Valuation When Selling Your Business:

    Unveils the Potential Value of your Business

    Knowing the right value of a business before listing it on the online portal or market is one of the basic steps that can’t be overlooked. Many business owners in the United States roughly estimate the value of their company without even enduring the business valuation process. That is the reason why they tend to either over or undervalue their business during the selling process. This not only creates a problem in finding a potential buyer but also impacts the overall reputation of a business.

    So, make sure you begin the valuation process far before the business goes up on the open market for sale. This will give you a better opportunity to boost your business’s value to get a higher selling price. After assessing the value of your business, you can list it on an online market to increase its visibility among potential and aspiring entrepreneurs.

    Since the competition is getting tougher, make sure you present your business’s worth and other statistics precisely in front of potential buyers. When you have a list of specific numbers and facts related to your company’s value, you can easily find the best buyer for your business.

    Helps in Finding Potential Buyer

    The concept of buying and selling businesses and franchise models is very popular in the United States. Many aspiring entrepreneurs and small business owners are asking for all the valuable information and insights to identity the best business opportunity in the United States.

    There are hundreds and thousands of business for sale in the United States, and giving your business better visibility among others has become challenging. If you want a potential buyer for your business, you have to undergo the business valuation process. You can show the stats, total revenue, earnings, assets real worth, and financial standings to give a clear picture of the business.

    When you know what your company valuation is, you can negotiate your way to get the best price for your business.

    Know Everything About your Company’s Assets

    The benefits of business valuation are countless. Being a business owner, you have to involve yourself in the valuation process to know the company’s assets before selling your business. This can help you measure the actual worth of your assets, including equipment, inventory, and land.

    The strategy works best when you don’t have a profitable business and are looking to liquidate. Though it doesn’t reflect the total value of the company, it can help you know the real value of your assets. Intangibles such as the goodwill or reputation of a company are excluded from the valuation process of assets. The company’s goodwill could include a strong customer base or a trustworthy relationship with clients and suppliers.

    Simplifies the Selling Process

    Many unfledged entrepreneurs make business strategies but fail to implement them due to lack of knowledge and decision-making skills. This is the most common scenarios in new businesses, and that’s the reason why 90 % of startups fail after three to five years of survival. On the other side, many well-established entrepreneurs sell their businesses to potential buyers. Retirement is one of the most common reasons behind selling the company.

    Many people sell because they way to try something different. The reason could be anything. But make sure you simplify the entire selling process by evaluating the worth of your company by your previous earnings. This will help you calculate the profits of your business and gives a clear picture of whether there is a risk of buying your business or not. Business valuation by earnings can’t predict future earnings, but it can help the buyer get complete information about your previous sales and revenues.

    Endnote

    Many business owners and experienced entrepreneurs rely on rules of thumb to know a selling price. Instead of estimating the worth of your company, it is always good to conduct a business valuation from an expert. Hiring a valuation expert can help in setting the sale price of your business. You can also access databases to reveal relevant information about finances, revenues, recent transactions, and cash flow issues.

    To find more potential business buyers, you can list your business in Business2Sell web portal. There you can get better opportunity and exposure for your business, which in turn, assist you in the entire selling process.

  • Author Info Mervin Wright

    Mervin Wright is a veteran business management professional with a long and established career in customer relationship management. He has completed a Doctoral Program in management from the prestigious Wharton Business School, University of Pennsylvania, and has won several accolades for his work in the field. His extraordinary vision and years spent in the corporate world have made him a sought-after name in the industry. Business2Sell is delighted to work with him and excited to get his valuable advice for our readers.