Client Question: If I Wanted to Sell My Business, What Is it Worth?

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Business worthThis is a common question that every business owner asks at one time or another.  The answer is simple:

Your business is worth what someone thinks it is worth!

Yes, I know, that’s very simplistic.  But at the end of the day, you will only know its actual value when you cash the check.

There are many rough rules of thumb in every industry for valuating a business.  To find one just Google “Rule of Thumb Valuation for (your industry)”.  This will at least give you a range that you can use to determine what amount you can expect to receive when you sell.

Businesses that are dependent on the owner for sales and profits are usually much harder to sell.  Buyers are much more interested in buying a business with systems in place that are being utilized by trained employees.  The buyers that pay the highest price for a business are usually not looking for a job but rather an investment.

Another thing the high-paying investor is looking for is a business with monthly recurring sales.  This makes it easier for the buyer to finance the business since they can point to the recurring sales as a method of repayment.

So if you want to sell your business for top dollar, you must make it a priority to develop and implement systems, train your employees on using them, and increase your recurring monthly sales.

Until next time, thank you for your continued support and let’s make this year our most profitable year ever!

Like any good CPA, I need to add a disclaimer:  Unfortunately, it is impossible to offer comprehensive tax info over the Internet, no matter how well-researched or written. And remember, I love my readers but having me bookmarked on your computer doesn’t make you a client: Before relying on any information given on this site, contact a tax professional to discuss your particular situation.