Company Valuation: Calculating the value of your business
When thinking about selling your business, there is often one question at the forefront of your mind, ‘how much is my business actually worth’. Although this one of the most common questions we get asked, unfortunately it is also one of the most difficult questions to provide a definite answer to.
This is because the value of a business is contingent on a number of factors both internal and external to your operations. These factors can and do change, many of which you will not have control over, meaning you are often at the mercy of the wider landscape.
Of course there are certain factors that will help a business achieve a good price on the open market; having a high turnover, a large profit margin, and a loyal and sizeable network of customers. This does not necessarily mean a business with these attributes will command a lot of money on the open market. Future potential and the opportunity for growth play a huge factor in business acquisition.
The value of a business is also heavily affected by environmental factors out of your control such as the current political and economic landscape. Factors such as a change of government, alterations to business funding, or overall consumer spending power, can see certain sectors be hit hard, while these same environmental factors could provide opportunity for others increasing the attractiveness of the business and therefore driving up the value.
With this in mind, you should remember that while the market may drive the value of a business, the buyer always dictates the price. Regardless of how profitable or attractive your business is, it is only worth as much as someone is prepared to pay for it.
With all these factors in play, it is notoriously difficult to put an exact price on a business, although a ball-park figure can be provided. At Selling My Business, when it comes to valuing your business, we consider it as the individual entity it is, rather than adopting a blanket approach based on industry or sector-based generalisations.
We have a database of clients looking for the right opportunity to acquire a new business. By selecting and approaching those more likely to buy your business, means you are not just more likely to achieve a sale, but you are also more likely to sell at a good price.
At the end of the selling process with us, you can trust that we have approached all likely buyers for your business, and that the offer on the table is the best you will be able to achieve in the current market.