Before putting your business up for sale, you should conduct a thorough analysis of its tangible assets. An external valuation is a must for this process. Not only will it help you determine what to ask for, it will also help you gauge whether to sell your business.
For selling a business, consult a business broker or banker. Ask them to help you prepare a document highlighting your business’ strengths and weaknesses. Your broker will also help you market your business to potential strategic buyers and negotiate the best price.
Setting prices requires considering a number of factors, including your product’s demand and your own business goals. First, understand your target customers. What are the attributes they want from a company like yours? Then, analyze the competitive landscape to understand the typical price range. Finally, consider trends in your industry. While you want to maximize profits, you also want to maintain a loyal customer base. After evaluating these factors, you can set a price range that will achieve your profitability goals.
The ideal time to sell a business is when there are multiple buyers for it. A strong buyer base gives you more negotiating power. But timing is also important. Selling your business at the right time can command the highest price. And it doesn’t matter if you want to sell your business to an investor or to yourself – preparation is key. Whether you sell your business or not will depend on how well-prepared you are, your broker’s quality, and the timing of the transaction. A valuation firm may be necessary. A third-party evaluation can also add credibility to your asking price.
Working capital is the money your business needs to run from one accounting period to the next. This can vary based on your business type and how long you plan to run your company, but in most cases you’ll need some initial cash to get your company up and running.
Know the components of your business
Your business is made up of many different components, and each one affects the overall value of the company. Some of the most important components to consider are:
- The tangible assets: Tangible assets include furniture, fixtures, equipment, and other physical items that are part of your business.
- The intangible assets: Intangible assets include copyrights, trademarks, contracts, and other intellectual property.
Gather as much information as possible about each component of your business and its value. When you know the true value of each item, you’ll be better equipped to determine the overall value of your company.
Conduct buyer research
As you start to shop around for potential buyers, it’s a good idea to conduct some buyer research. While this is not a required step in business valuations, it can help you get a better understanding of what to expect and determine whether or not a certain buyer is a good fit.
When you’re deciding how much to charge for your product or service, consider the value of the benefits your customers get from your business. It’s important to remember that your pricing needs to cover your costs, including fixed costs and variable costs. The higher you can price your product, the more profit you’ll make. Remember that each sale contributes towards covering fixed costs and earning profits. You don’t want to undersell yourself to get a high profit.
