How to Determine What Your Business Is Worth

There are many reasons to have an up-to-date business valuation. For example:

  • You may need to sell the business due to retirement, health, divorce, or for family reasons.
  • You may need debt or equity financing for expansion or due to cash flow problems. Potential financiers or investors will want to see that the business has sufficient worth.
  • You may be adding shareholders (or one or more shareholders may wish a buyout). In this case, share value will need to be determined.

Regardless of the reason, how much your business is worth depends on many factors, from the current state of the economy through your business’s balance sheet. If for example, similar businesses in your area have recently sold, the value of your business will be determined in large part by the selling price of the previous sales.

Get It Done Right

Business owners should not do their own business valuation. This is too much like asking a mother how talented her child is. Neither the business owner nor the mother has the necessary distance to step back and answer the question objectively.

So to ensure that you set and get the best price when you’re selling a business, get a business valuation done by a professional.

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