Do you know what factors influence how a business is valued?
There comes a time in some business people’s lives where they desire to sell arises. Maybe you don’t have an heir, need to make a retirement fund or a similar situation — regardless of the reasons, you’ll need to set a price. Understanding what allows your business to have value can be difficult. While there is an importance on the business value and success, there are a few other factors that potential buyers will have to consider.
Location, Location, Location
Just as with any home or retail-focused business, the first thing your potential buyers will consider is your location. Is it rural, suburban, or in a city? Are your rent or office taxes incredibly high? Are you too rural for potential employees? Last but not least is your company situated in an area where there is a steady inflow of customers?
Type Of Business
Not all businesses have the same social standing. If you own a coffee shop versus something like a pawn shop, even if the pawnshop is more successful, you may have a harder time selling it. Not only is this because most would rather invest in a business they see themselves in that doesn’t have a social stigma.
Diverse Client Base
Your client base can have an impact on your company value as well. Consider how many clients you have, depending on the type of business you may have only one or two large clients as opposed to many small ones. In the case that you have few clients, a buyer may be worried about what happens if you lose them.
Recurring Income
Do you have to work to make every sale, or do your have reoccurring income base? If you have a more reliable income, you’re likely to be considered a safer option by potential buyers. If you have a service that is billed monthly, for instance, you’re better off than if you’re selling individual items.
Sell With Atlantic Business Brokerage, Inc.
At Atlantic Business Brokerage, our mission is quite simple; we help sellers sell businesses, and buyers buy businesses! Over the past 30 years, ABBI has facilitated the sale of countless commercial properties, businesses, and franchised locations. With our unparalleled knowledge of the business purchase and sale industry and our network of contacts, we offer services to both buyers and sellers that no other brokerage firm can match.
Contact us to discuss your business buying and selling goals today at 410-561-9800, or Toll-Free at 800-279-7569. Email us at [email protected], and follow us online on Facebookand LinkedIn.