What is your Business Worth

Most of the time, it really does not matter what is your business worth on books or how much amount it is appraised in the market.

Generally, the true worth of your business depends on the amount or price offered by someone who is willing to buy it from you.

If the new owner of your business can’t afford to pay the bank from the profit that the business produces then definitely, no one will purchase it. If you want your business to be sold, price it on the actuality on how the buyer can meet his or her needs such as salary for him and his staffs, payments to the loan he borrowed, and investment return.

Although most of the buyers are looking for a company with really good growth potential, the amount they will deal can be based upon the financial performance of the business in the past, especially to the cash flow of the previous year. Most banks look at these things carefully and will find many physical assets for the collateral. So, when you prepare your business for selling you must consider things like showing as much of your business profit for the last 3 to 5 years written on books if possible. Buyers will have a hard time convincing a bank or other financial institution to finance their deal if there is no profit to be shown on books.

Another thing to consider is to allow potential buyers to see your tax returns for the last 3 to 5 years, balance sheets, equipment and machinery list, and even the business’ inventory list. Also, concentrate your sales pitch on target people who really know your business. Large customers, key suppliers, and even employees might be the best people to purchase your business. For much further assistance when selling your business, you can contact an SBTDC counselor even though they are not into appraising a business. With their help, you can figure out if the prospective buyer can make a profit or break even your selling price.


    (All the above fields are required.)