How do I Value my Small Business?

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The problem with marketing any small business ($500,000 and below) is how can a practical value be put on the business. In case a business is valued too high no one is going to be interested or even worse value it too low prospective buyers may feel there is something abnormal. Also where it is listed for sale is essential, EBay is really a incredible medium for several things however scams is normal.


Sadly there is absolutely no fixed method with regards to valuing any personal business, the irs, Courts of Law as well as the Inland Revenue all use there own methods. In addition there are a lot of wonderful mathematical formulas which you can use; however there is no fixed method. To tell you the truth the entire system is difficult without any fixed guideline aside from one. What price is an individual is pleased to sell a business for and what is the purchaser happy to pay?


In case you are either buying or selling a small business don’t let yourself be afraid of negotiation, it is a natural process within businesses. There are lots of good negotiation strategies; Maitland Kalton of Kaltons Solicitors London is considered an expert in this field.


The following list is a simple assistance to help people who are interested in finding a value of a business, either for the sale or purchase.


1.            Is the business solely a web based business? Be warned it is extremely easy for an online business to appear to be doing very well, when the fact is entirely the contrary. This kind of practice sadly is leading to the devaluation of genuine online businesses.

2.            Does the business have fixed assets or stock? It is much easier to value a car port where real estate and equipment may be easily valued, where as it is more difficult to value a small business without any fixed assets I.e. Legal specialists, Solicitors, Health workers etc.

3.            Does the business possess a full audit trail; it can be surprising how many small businesses listed for sale don’t.

4.            What area is the business in; it goes without saying that businesses found closer to major cities tend to be valued more than those thar are in a rural district.

5.            What are the upcoming growth prospects for the business?

6.            Will the business require insurance/liability policies?


These are just a couple of elements that have to be considered, as you can see there is much more to take into consideration than simply how much revenue is generated by the business. I hope this short article has been of some assistance to any kind of possible buyer or seller of any small business.


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