How to value the worth of your business
Ask FSB's experts have some surprising advice about how to determine your businesses' value. Have you had to value yours? How did you go about it?
From Paul South Florida Before calling in someone to value your business,clear off the books of any dead-stock merchandise. This will show a higher stock to selling ratio and increase the value of the business.
JMHO
http://www.sellmyinventory.com
From Steve Pohlit Tampa Bay, Florida valuation is in direct proportion to the buyer's estimate of return on investment with the purchase price of a profitable business being recovered by earnings in a 3-7 year period depending on the business and nice.
A key factor in most deals is the fair market value of hard assets. For an IT business you may have some receivables, software, equipment and if you have developed proprietary systems that are trademarked then those are a bonus if they are, in fact, valuable to the marketplace as evidence by installed sales.
If I were buying your business I would look carefully at the niche markets you serve and the competition. I would also want to know the turnover rate of your number one asset which of course is your staff. The skill sets of your professionals would be of great interest since I would need to evaluate how difficult it would be to replace them as some of them would leave.
I would want to be very clear how services are marketed. For example if business has been developed by the relationships of the current owners with a handful of key clients, that would affect my view of value. I might want to cushion that with part of the purchase price in escrow to be released with an agreed upon transition plan.
Ultimately a buyer is buying a book of business that needs to be replenished as projects are finished. If I felt very confident in replenishing that business and growing the portfolio, that would influence how much I would be willing to pay.
If you are intent on selling your business you should have a very realistic picture of the risk associated with the deal from a buyer's perspective. Once you have the benefit and risks well defined, you are in a better position to identify who might be interested in buying that picture.
Hope this helps
Steve Pohlit
http://www.asktheconsultant.biz
Net profit is the main number of concern. Gross production is an indication, but can't be spent. Expenses vary by volume, but have a limited ability to be controlled. Labor costs are relatively fixed if near full efficiency is present. If you determine stability of the income generation (private, insurance rates), efficiency of the technology in the office and future of procedures done (limited procedures done or across the board practice), the value can be determined. Overall impression of the office facility can increase or decrease this value, probably up or down 10%. One years net plus value of hardgoods or 60% of gross is general rules.