Typically, the sales range for small businesses is between two and three times the profit. Outliers can be multiples of once or less or four times or more. On rare occasions, I have seen well-managed companies in a growing market make profits up to seven times higher. If buying and selling businesses is a new frontier for you, you can check out any number of online resources to help you determine the value of a business.
But even if you don't plan to sell or already have an offer, knowing how to value a business and determine the value of your own business can help inform your company's roadmap, as well as future exit strategies. A well-managed company will considerably facilitate the transition of ownership, without losing profits in the process. This means intellectual property, your production line, your delivery truck, if it's part of your business, you'll have to account for it as an asset or a liability. Entrepreneurs looking to buy an existing business should also be familiar with valuations and feel comfortable estimating value regardless of the selling price of the business owner or broker.
A company is likely to sell between two and four times the seller's discretionary profit range (SDE), with most sales within the 2 to 3 range. Besides, why would you sell anyway? Are there better opportunities elsewhere? Is the business facing any risks or is it growing? Personally, I don't think I would sell my business or my blog because it would be very difficult to replicate the net income of either of us. As you can tell from its name, the market approach to valuing a business determines the value of a company based on the purchases and sales of comparable companies within the same industry. Because the process of determining the value of a small business is complicated, you may want to consider consulting a business agent or professional accountant who specializes in valuation, rather than doing it alone.
I think someone else with experience in advertising and sales could be more aggressive and grow the business substantially. The business has virtually zero overhead, as the product and equipment needed to run the business cost less than $500. Any company can use this approach for business valuation, as long as it can gather enough and relevant data to compare its business. Keep in mind that you need to figure out how much your small business is worth to someone else who is buying an existing business.
Selling with a commercial agent is better if you want to attract several buyers and maximize the selling price. Personally, I feel like my boss must be on another planet to want £15,000 for the bicycle business that I have literally created for me an income. My specialty was in music and I never thought I would sell hot sauces, barbecue sauces, condiments and dressings.
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