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A Look at Divestopedia’s Article, “The Myth of Fair Business Valuation”

Posted by & filed under Build Business Value, Building Business Value, Business Owner, Business Valuation, Seller Articles, Seller FAQ, Selling a Business, Valuation, Value Builder System™.

In Divestopedia’s article, “The Myth of Fair Business Valuation: What Professional Valuations Don’t Tell You,” author Chak Reddy is quick to point out that the “type of buyer and method of sale are two important (yet often overlooked) value determinants when finding a starting price for your business.”

Reddy brings up some excellent points. One notion in particular that every business owner should be aware of is that there is “NO fair value for illiquid assets.” He points to the fact that between January 2007 and March 2008, the historic Bear Stearns went from a value of $20 billion dollars to just $238 million. In a mere 14 months, Bear Stearns lost most of its value.

Additionally, the article points to the fact that business owners often suffer enormously from “dramatic valuation compression.” In Reddy’s view, this compression is the direct result of poor planning and a failure on the part of business owners to select the right advisory teams.

Reddy believes that professional valuations can be quite lacking. He feels that they are “contingent on multiple assumptions,” and that the valuations are only as good as the assumptions upon which they are based. In other words, professional valuations can be limited and flawed. In particular, he points to the fact that two of the most important factors in valuations, future growth rate and operational synergies are “highly subjective and no two views on these topics are likely to be identical.” Summed up another way, valuations are inherently a matter of opinion and perspective. Reddy feels that a seller will be “lucky” if the real sales price comes within 10% to 20% of the professional valuation.

In the end, as always, it is the market that determines value. It is the acquirer who will determine the value more than any other factor. The perception of the buyer will play a key role in the process and, further to the point, no two buyers will perceive the business exactly the same way. In other words, valuations can be tricky and certainly do involve a personal element of the individual who is appraising the business’ value. Adding to this point, Reddy states, “From our experience, the type of buyer and the type of sale skew the valuation to such an extent that it is unwise for a business owner to not be familiar with these variables and their impact before the beginning of the sales process.”

Ultimately, finding the right buyer is essential and this is where a business broker can prove simply invaluable. And finding that right buyer may take time.

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Whether you are looking to exit your privately held business, represent an acquisition-minded corporation, value your business, or are personally interested in owning or building value in your own company or franchise, Colonial Business Brokerage offers the professional services that successfully bring buyers and sellers together.

Call Colonial Business Brokerage today at (443) 982-7332.

Copyright: Business Brokerage Press, Inc.

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7 Advantages of Buying an Existing Business

Posted by & filed under Build Business Value, Building Business Value, Business Owner, Business Valuation, Buying a Business, Valuation.

With 28 million small businesses open today, now may be the perfect time to invest in your own. As you begin taking the first steps to business ownership, it’s wise to think about the benefits of buying an existing company. Continue reading to discover the advantages of buying an existing business compared to starting your own.

Benefits of Buying an Existing Business

Before becoming a business owner, explore the benefits of buying an existing business to ensure you make a well-informed decision.

1. Low-Risk Investmentanalyzing the advantages of buying a business

Buying an existing business is considered a low-risk investment compared to starting your own business from scratch. With a new company comes costs from real estate, hiring new employees, education and training, equipment, furnishings, marketing, and more. Unlike a new business, an existing business may include most of these in the asking price, depending on the transaction. Plus, banks see buying an established business as low-risk because the company is a proven success, unlike new businesses that can be experimental.

2. Current Staff

When buying an existing business, the employees that are loyal to the company will most likely want to see it succeed. You won’t need to train them, and they can help you along the way if you are new to the industry. In addition to a well-trained staff, existing employees can also provide key intel into the overall business operations. Their experience working with the previous owner can shed light on the positives and the negatives of the company.

3. Expertise

If you’re not already an expert in the company’s industry, buying an existing business is a great way to learn the ropes. Both the staff and previous owner are excellent sources of information and insight, so it’s best to keep an open line of communication when going through the process.

4. Established Clientele

Along with the employees, loyal clients and customers will want to see the business succeed as well. These customers will have the insight to help you improve the company, so be sure to research their experiences to see how you can enhance their future ones.

5. Furnishings and Equipment

In most business deals, the transaction includes the real estate as well as furnishings and equipment. If a deal doesn’t include these items or if you’re starting a new business, expenses can add up quickly. The best way to ensure you’re making a wise investment is to consult with a business broker or another professional to help explain the listing details.

6. Thriving Business

For new business owners, the first 18 months of ownership is the most critical. By purchasing an existing business, you are investing in one that has likely already made it past this point. Your company’s success depends on multiple different factors, but knowing you’re investing in a business that beat these odds is a tremendous advantage to any new business owner.

7. Entrepreneurial Freedom

Buying a business may not sound as thrilling as starting your own from the ground up, but you can still implement all of the creative ideas you have. Once you invest in a business and the deal is done, you can make it into your own.

Buying an existing business can be just as challenging and rewarding as starting your own. Be sure to do your research when thinking about investing in a business to discover your best options.

Whether you are looking to exit your privately held business, represent an acquisition-minded corporation, value your business, or are personally interested in owning or building value in your own company or franchise, Colonial Business Brokerage offers the professional services that successfully bring buyers and sellers together.

Call Colonial Business Brokerage today at (443) 982-7332.

Around the Web: A Month in Summary

Posted by & filed under Seller Articles.

A recent article from Divestopedia entitled “7 Fundamentals to Due Diligence You Need to Know” explains the due diligence process and what it means regarding sellers and buyers and their roles in the process.

Whether a company is being sold or it is merging with another company, it is standard practice to go through the due diligence process. Therefore, they should be aware of all the factors involved with the due diligence process. The fundamentals of due diligence can be broken into 7 categories:

  1. Historic and Projected Financial Information
  2. Technology Developments and Intellectual Property
  3. Customers and Revenue Streams
  4. Contract Agreements and Insurance
  5. Key Staff and Management
  6. Legal and Compliance
  7. Tax Issues

In each of these 7 critical areas, the buyer and the seller each have to do their part in order to see the deal make it to the finish line. The seller has to be open and honest with the attorneys, their advisory team and the potential buyer; and the buyer has to be thorough in examining and combing through all of the information provided.

Click here to read the full article.

A recent article from NuWire Investor entitled “How to Find the Right Broker to Sell your Business” explains the most important characteristics a seller should be looking for in a business broker when deciding who to hire.

When it comes to hiring a business broker to sell your business, you want to ask the following questions to ensure that you’re choosing a broker who will improve your experience and increase the chances of selling your business:

  • What do they know about major players, important trends, insider terminology or future industry projections? It’s important that a business broker is well acquainted with and well connected in your specific industry.
  • What have they sold before, and what is their success ratio? Beware of a business broker who isn’t transparent with you on these things.
  • How do they charge for their services and when are they expecting to be paid? A good business broker will set these expectations up front, very clearly in the agreement between the seller and broker. Typical commissions are between 8 and 12%, paid after the business is sold.
  • How is the business broker planning to market your business? As a buyer, you want to make sure that the broker you choose to work with has plans to engage their network and actively seek out connections who would be interested in your business.

When it comes to choosing a business broker to work with, who you choose to handle the sale of your business matters tremendously. It is better to take your time and find someone who makes you feel comfortable and has the proper knowledge and connections than it is to miss out on a favorable deal.

Click here to read the full article.

A recent article from Inc.com entitled “Selling a Business in 2019: Three Important Things to Keep in Mind” discusses the factors that sellers should consider when developing their exit plan, according to small business experts.

While sales prices are rising and 60 percent of owners are confident that they would receive a favorable sales price if they sold their business today, it’s understandable that some owners would be tempted to jump into a sale. With the baby boomer generation fueling the market at a rate that is faster than ever, and GDP expecting to slow its pace as we approach 2020, entering the market now becomes even more enticing. However, experts warn sellers not to prematurely jump into a deal and to have a clear and well-thought-out exit strategy to guarantee an optimal sales price and a smooth sale.

Two critical parts of a well-thought-out exit strategy are investing in your business and preparing your financials. Once you’ve made the decision to sell your business, experts suggest determining any key items that will either motivate or deter a buyer from choosing your business over the other businesses on the market. Use these key items to invest in your business and make it more appealing on the market. 2019 is expected to bring multiple increases in the overhead expenses associated with running a business. When preparing your business for sale, make sure you address these concerns and clean up your financials. Be prepared to have a good explanation for any revenue declines.

Click here to read the full article.

A recent article from Entrepreneur.com entitled “3 Reasons Buying a Franchise Might Be Better Than Starting Your Own Business” explains how purchasing a franchise provides exceptional support and guidance when it comes to getting your business up and running. There are 3 key advantages to purchasing a franchise:

  1. Carrying the name of an already established business makes it easier to gain new business from startup.
  2. Cost Benefits: When purchasing a franchise you have to pay a franchise fee, which may increase your initial costs, but it gives you access to many resources that can help your business turn a profit faster than if you were to start up a business from scratch.
  3. The ability to sell at a higher price when it comes time to exit: A well-known brand and business operations consistency combined with a detailed transition manual provided by the franchisor allows for a smoother transition and a higher chance of profitability for the buyer.

Click here to read the full article.

A recent article from Divestopedia entitled “How Do I Attract a High Multiple for My Business? – The Sales Process” explains how the sales process impacts a company valuation.

While you cannot transform an average business into a high multiple business, there are a few guidelines you can follow to encourage a higher enterprise value at the closing date. The first of these guidelines is that the ideal time to sell is when there are positive trends in revenue and earnings. A positive trend means that there has been consistent growth over the past two years (keyword: consistent) and that there are future prospects on the horizon.

The second important factor in the sales process is who you’re selling to. It’s crucial to not only thoroughly screen your buyers, but to keep as many options open as long as possible. When there are multiple buyers interested, you have leverage as the seller.

The third and final piece affecting the end value of your business in the sales process is why you’re selling it. Who you choose to sell the business to and how long you remain after the sale is highly dependent upon this answer.

Click here to read the full article.

Copyright: Business Brokerage Press, Inc.

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A Small Giant Makes A Great Exit

Posted by & filed under Build Business Value, Building Business Value, Business Owner, Business Valuation, Seller Articles, Seller FAQ, Selling a Business, Valuation, Value Builder System™.

Tyler Tringas was adamant on establishing his SaaS business without the help of external capital.

He founded Storemapper—a business that provides small businesses with a platform to showcase the location of their products in store for curious consumers—in 2012.

By 2017, Storemapper was seeing $50,000 in monthly recurring revenue. Ready to build his next business, Tringas made moves to sell the company, including moving himself away from day-to-day business operations, learning critical questions to ask potential buyers and maintaining radical transparency to accelerate the sale.

In this episode, you’ll learn:

  • How to know when it’s time to sell
  • The importance of asynchronous communication and how to integrate it into your hiring processes
  • How Tringas used radical transparency to attract buyers and accelerate the sale process
  • The subjectivity of Seller’s Discretionary Earnings (SDE) and how it can impact your value
  • Defining strategic and financial buyers for your company

Listen Now

Do you want to improve the value of your business?

If you’re interested in improving the value of your business, take our questionnaire or contact Colonial Business Brokerage today at  (443) 982-7332.

How to Get Started When Selling Your Business

Posted by & filed under Build Business Value, Building Business Value, Business Owner, Business Valuation, Seller Articles, Seller FAQ, Selling a Business, Valuation, Value Builder System™.

So you’ve decided to sell — now what?

There’s no time like the new year to list your business for sale. However, selling requires more than just posting an ad. If you are adequately prepared, the actual listing can be a quick process. But, if you have only recently decided to sell your business, it can take as long as a year before you are ready to list it.

Still, the new year is a great time to make changes and future plans, so there’s no need to panic if the second scenario sounds familiar. Instead, consider the following steps to get the ball rolling:

Seek professional assistance

Now that you’ve decided to sell, consult with a professional to determine the next steps. The type of professionals you enlist depends on the complexity of your business and the amount of time you are willing to devote to the sale.

Reputable and experienced professionals are necessary for avoiding legal and financial roadblocks during the sale. They can also help you reach a more favorable outcome. A professional sales team is typically comprised of several players, including accountants, attorneys, business brokers, appraisers, and consultants. That may seem like a long list, but depending on your needs, it may not be necessary to recruit them all.

Determining which professionals you need on your team requires a deeper understanding of how each professional fits into the selling process. This insight, as well as a clear understanding of your own business needs, will help you select the right players for your team.

Define your goals

Before you pull the trigger on exiting your business, stop and ask: “why am I selling?” It might seem like a useless question, but believe it or not the success of your sale hinges on the answer.

There are many reasons why owners decide to sell — retiring, moving, diversifying and burnout are the most common. Your answer and how you present it influences potential buyers’ view of your business. For example, if you are clearly frustrated and burned out, buyers may hesitate to put themselves in a similar situation. The answer can also determine the speed and potential profit of the sale — a lower price will likely result in a quicker sale versus waiting out for the highest bid.

There are also after-sale goals to consider. Are you concerned about what happens to your business after you leave? What do you plan to do next?

While some sellers prefer to maintain contact and stay on as an employee or consultant, others walk away without turning back. It’s up to you to decide whether or not a significant change will have a negative impact on the business and whether or not you want to alleviate this by staying on.

If you decide to offer seller financing, you could attract more buyers and receive a higher sale price. You could also profit from collecting future interest. Yet, if the business fails under the new owner, you would lose interest income and incur expenses trying to collect on the debt.

Research the Market

Research is necessary to understand the current market and secure a fair price for your business. Luckily, the current market is strong and presents sellers with an opportunity to receive top dollar for their businesses. However, it’s still necessary to evaluate the market and see where your sale fits. Compare your business with others in your industry to avoid misvaluing the sale. While undervaluing your business is an obvious disadvantage, overvaluing your business can delay and even prevent a sale.

Fluctuations in the market will provide insights about the best time to sell in your industry. A professional broker can help with this, outlining the trends and providing you with more precise timing and an accurate asking price.

Boost Value

After investing years of blood, sweat and tears in their companies, owners are often disappointed to learn that the real market value falls short of their expectations. To avoid this shock, get a realistic assessment of your business and then take the time to increase its value and make it more attractive to potential buyers.

Your business’s value is directly tied to its profitability. Boosting sales, reducing costs and eliminating inefficiencies leading up to the sale will increase profitability and attract more qualified buyers.

Value is also tied to your business’s tangible and intangible assets (goodwill). Not only is there value in you furniture, fixtures, inventory, and equipment, but also your intellectual property, branding, customer/vendor relations and reputation.

A fresh coat of paint can add value to your business, but so can a strong Internet presence. Because websites are often the first online impression you make with potential buyers, they should always look professional and up-to-date, including links to your social media pages. Consider doing a Google search of your business and check for any information that needs updating.

Are you ready to sell?

The decision to sell your business is exciting, but it shouldn’t be made in haste. An impulsive urge to sell can blind owners to the fact that a beneficial sale takes time, research and preparation. It also requires guidance from the right professionals. The more time you invest in outlining your goals, making your business desirable and enlisting the right assistance, the more likely you are to experience a smooth sale process — and receive a higher price for your company.

Whether you are looking to exit your privately held business, represent an acquisition-minded corporation, value your business, or are personally interested in owning or building value in your own company or franchise, Colonial Business Brokerage offers the professional services that successfully bring buyers and sellers together.

Call Colonial Business Brokerage today at (443) 982-7332.

Obtaining a Fair Market Value for Your Business

Posted by & filed under Build Business Value, Building Business Value, Business Owner, Business Valuation, Seller Articles, Seller FAQ, Selling a Business, Valuation.

Divestopedia published a rather insightful article, “Letting the Market Bridge the Valuation Gap.” In this October 2018 article, Dave Kauppi dives in and explores how fair market value can be used as a way for business owners to “bridge the gap between the valuation they feel they deserve and that which they’re likely to receive.” This, of course, increases the chances of a deal actually taking place. Let’s turn our attention to some of the key points in Kauppi’s informative article.

Understanding the Reality of Selling a Business

One key point is that only a low percentage of businesses actually sell on their first attempt. The article points out that a mere 10% of businesses that are for sale are actually sold three years later; this is a simply brutal fact. Few facts, if any, help underscore the value of working with a business broker more than this point. Selling a business can be difficult under even the best of circumstances. The process is complex, and most sellers have never actually sold a business before.

Divestopedia believes that it is critical for business owners to have realistic expectations regarding valuation. As the article points out, the market doesn’t care “how much money you need for retirement,” or how much you’ve invested.

Four Points to Consider

According to the article, it is important that business owners understand that a few business characteristics will ultimately drive the sale. There are four key factors to consider: contractually recurring revenue, durable competitive advantage, growth rate, and customer concentration.

There is a lot packed into these four points, but here are a couple of big takeaways. In terms of customer growth, if a large percentage of your business is derived from a single customer, then that is going to be seen as a problem. As Divestopedia points out, if your company is dependent and partially dependent on a single customer, then you can expect a lot of pressure for you, as the business owner, to stick around a lot longer to ensure that this key customer isn’t lost. If intellectual property, such as software, is involved, then things can get even more complex. In the end, determining value in technology-based companies can be more challenging.

In the end, working with a seasoned business broker, one that understands valuation and how best to get there, is a must. You want to receive the best possible price for your business. An experienced business broker will help you understand how to navigate the complex process of determining a price. However, and most importantly, a business broker will help you achieve a fair market value so that your business doesn’t remain unsold for years.

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Whether you are looking to exit your privately held business, represent an acquisition-minded corporation, value your business, or are personally interested in owning or building value in your own company or franchise, Colonial Business Brokerage offers the professional services that successfully bring buyers and sellers together.

Call Colonial Business Brokerage today at (443) 982-7332.

Copyright: Business Brokerage Press, Inc.

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Four Significant Issues You Need to Consider When Selling Your Business

Posted by & filed under Build Business Value, Building Business Value, Business Owner, Business Valuation, Seller Articles, Seller FAQ, Selling a Business, Valuation.

The process of selling a business can be very complex. Whether you’ve sold a business in the past or are selling a business for the very first time, it is imperative that you work with an expert. A seasoned business broker can help you navigate through what can be some pretty rough waters. Let’s take a closer look at four issues any seller needs to keep in mind why selling a business.

Number One – Overreaching

If you are both simultaneously the founder, owner and operator of a business, then there is a good chance that you are involved in every single decision. And that can be a significant mistake. Business owners typically want to be involved in every aspect of selling their business, but handling the sale of your business while operating can lead to problems or even disaster.

The bottom line is that you can’t handle it all. You’ll need to delegate the day-to-day operation of your business to a sales manager. Additionally, you’ll want to consider bringing on an experienced business broker to assist with the sale of your business. Simultaneously, running a business and trying to sell has gone awry for even the most seasoned multitaskers.

Number Two – Money Related Issues

It is quite common that once a seller has decided on a price, he or she has trouble settling for anything less. The emotional ties that business owners have to their businesses are understandable, but they can also be irrational and serve as an impediment to a sale. A business broker is an essential intermediary that can keep deals on track and emotions at a minimum.

Number Three – Time

When you are selling a business, the last thing you want is to waste time. Working with a business broker ensures that you avoid “window shoppers” and instead only deal with real, vetted prospects who are serious about buying. Your time is precious, and most sellers are unaware of just how much time selling a business can entail.

Number Four – Don’t Forget the Stockholders

Stockholders simply must be included in the process whatever their shares may be. A business owner needs to obtain the approval of stockholders. Two of the best ways to achieve this is to get an attractive sales price and secondly, to achieve the best terms possible. Once again, a business broker serves as an invaluable ally in both regards.

Selling a business isn’t just complicated; it can also be stressful, confusing and overwhelming. This is especially true if you have never sold a business before. Business brokers “know the ropes” and they know what it takes to both get a deal on the table and then push that deal to the finish line.

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Whether you are looking to exit your privately held business, represent an acquisition-minded corporation, value your business, or are personally interested in owning or building value in your own company or franchise, Colonial Business Brokerage offers the professional services that successfully bring buyers and sellers together.

Call Colonial Business Brokerage today at (443) 982-7332.

Copyright: Business Brokerage Press, Inc.

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5 Big Questions to Consider when Financing a Business Sale

Posted by & filed under Build Business Value, Building Business Value, Business Owner, Business Valuation, Seller Articles, Seller FAQ, Selling a Business, Valuation.

How should the purchase of a business be structured? This is a point that you’ll want to address early in the sale process. For most people, buying or selling a business is one of the most, if not the most, important business decision that they will ever make. For this reason, it is vital not to wait until the last minute to structure your deal. Let’s turn our attention to the most significant questions that you need to answer when entering the sales process.

1. What is My Lowest Price?

The first question you should ask yourself is, “What is the lowest price I’m willing to take?” If an offer is made, the last thing you want is to be sitting around trying to decide if you can take a given offer at a given price. You need to be ready to jump if the right offer is made.

2. What are the Tax Implications?

Secondly, you’ll want to seriously consider the tax consequences of any sale. Taxes are always a fact of life and you need to work with a professional, such as an accountant or business broker, to understand the tax implication of any decision you make.

3. What are the Interest Rates?

The third factor you want to consider is interest rates. If you get a buyer, what is an acceptable interest rate for a seller-financed sale?

4. Are there Additional Costs Involved?

A fourth key question to ask yourself is do you have any unsecured creditors that have not been paid off? Additionally, you’ll also want to determine whether or not the seller plans on paying for a part of the closing costs.

5. Will the Buyer Need to Assume Debt?

Finally, will the buyer need to assume any long-term or secured debt? The issue of long term and/or secured debt is no small issue. Be sure to clarify this important point well in advance. Also, keep in mind that favorable terms typically translate to a higher sales price.

Business brokers are experts at buying and selling all kinds of businesses. When it comes time to structure a deal that benefits both the buyer and the seller, business brokers can prove to be invaluable. At the end of the day, working with a business broker is one of the single biggest steps you can take to ensure that your business is sold and sold as quickly as possible.

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Whether you are looking to exit your privately held business, represent an acquisition-minded corporation, value your business, or are personally interested in owning or building value in your own company or franchise, Colonial Business Brokerage offers the professional services that successfully bring buyers and sellers together.

Call Colonial Business Brokerage today at (443) 982-7332.

Copyright: Business Brokerage Press, Inc.

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Considering All of Your Business Real Estate Options

Posted by & filed under Build Business Value, Building Business Value, Business Owner, Business Valuation, Seller Articles, Seller FAQ, Selling a Business.

In a recent December 2018 article in Divestopedia entitled, “Options for Business Real Estate When Selling a Company,” the topic of business real estate was explored at length.

One of the key points of the article was that understanding one’s business real estate options would ultimately help in achieving “the goals desired in a transaction.” The article is correct to point out that many, or even arguably most, business owners simply don’t know what real estate options are available to them when it comes time to sell the company.

In particular, there are two big options:

  1. Sell everything including the real estate.
  2. Hold onto the real estate for the rental income.

In the Divestopedia article, the authors correctly point out that if you, as the business owner, personally own the real estate in a separate entity, then you are good to go. You should have a “clear path to valuation.”

However, if your company owns the real estate, then things get a little more complicated. If this is the situation you’ll want to have a third-party appraisal of the real estate so that its value is clear. The article also points out that if your business is a C-Corp and your business also owns the real estate, then it’s a good idea to talk to your accountant as there will be differences in taxation.

Every situation is different. Many buyers will prefer to acquire the real estate along with the business. On the other hand, many buyers may prefer a lease, as they don’t want everything that comes along with owning real estate. Communicating with the buyer regarding his or her preference is a savvy move.

Now, as Divestopedia points out, if you do plan to retain the building, then you’ll want to be certain that a strong lease is in place. Ask any business broker about the importance of having a strong lease, and you’ll get some pretty clear-cut feedback. Namely, you always want to have a strong lease.

Issues such as who repairs what and why should all be spelled out in the lease. It should leave nothing to chance. One of the best points made in the Divestopedia article is that you will want a strong lease for another key reason. When the time comes to sell the property, you want to show you have a lease that is generating good income.

Real estate and the sale of your business are not one-dimensional topics. There are many variables that go into selling when real estate is involved. It is important to consider all of the variables and work with a business broker who can help guide you through this potentially complex topic.

Whether you are looking to exit your privately held business, represent an acquisition-minded corporation, value your business, or are personally interested in owning or building value in your own company or franchise, Colonial Business Brokerage offers the professional services that successfully bring buyers and sellers together.

Call Colonial Business Brokerage today at (443) 982-7332.

Copyright: Business Brokerage Press, Inc.

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Determining Your Company’s Undocumented Value

Posted by & filed under Build Business Value, Building Business Value, Business Owner, Business Valuation, Seller Articles, Seller FAQ, Selling a Business.

Business appraisals are not one-dimensional. In fact, a good business appraisal is one that factors in a wide range of variables in order to achieve an accurate result. Indisputable records ranging from comparables and projections to EBITDA multiples, discount rates and a good deal more are all factored in.

It is important to remember that while an appraiser may feel that he or she has all the information necessary, it is still possible they have overlooked key information. Business appraisers must understand the purpose of their appraisal before beginning the process. All too often appraisers are unaware of important additional factors and considerations that could enhance or even devalue a business’s worth.

There Can Be Unwritten Value

Value isn’t always “black and white.” Instead, many factors can determine value. Prospective buyers may be looking at variables, such as profitability, depth of management and market share, but there can be more that determines value.

Here are some of the factors to consider when determining value: How much market competition is there? Does the business have potential beyond its current niche? Are there a variety of vendors? Does the company have easy access to its target audience? At the end of the day, what is the company’s competitive advantage? Is pricing in line with the demographic served? These are just some of the key questions that you’ll want to consider when evaluating a company.

There are Ways to Increase Both Valuation and Success

No doubt, successful businesses didn’t get that way by accident. A successful business is one that is customer focused and has company-wide values. Brian Tracy’s excellent book, “The 100 Absolutely Unbreakable Laws of Business,” notes that it is critical for businesses to have a company-wide focus on three key pillars: marketing, sales and, of course, revenue generation. Tracy also points out that trends can be seen as the single most vital factor and bottom-line contributor to any company’s success and, ultimately, valuation. For 2018 and beyond, projected trends include an increase in video marketing, the use of crowdfunding as a means of product validation and more.

No Replacement for Understanding Trends

If a company doesn’t understand trends, then it can’t understand both the market as it stands and as it may be tomorrow. Savvy business owners understand today’s trends and strive to capitalize on the mistakes of their competitors while simultaneously learning from their competitors’ successes.

Tracy accurately states that while there are many variables in determining value, finding and retaining the best people is absolutely essential. One of the greatest assets that any company has is, in the end, its people.

Whether you are looking to exit your privately held business, represent an acquisition-minded corporation, value your business, or are personally interested in owning or building value in your own company or franchise, Colonial Business Brokerage offers the professional services that successfully bring buyers and sellers together.

Call Colonial Business Brokerage today at (443) 982-7332.

Copyright: Business Brokerage Press, Inc.

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