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What’s My Business Worth


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The answer every business owner wants to know. What is my business worth?

Ask 100 people and you’ll get 100 different answers. You’ll hear things like: “it’s a multiple of gross”, “it’s a multiple of net”, “Add the asset value and the net”, “My friend sold a similar business for $$$$$” and much more. While that’s true there are common factors that impact value. Let’s review the most important:

  • Are sales increasing or declining?
    • Clearly an important fact. As a rule selling when business is good is the way to go, but many businesses still have good value even if sales are declining.
  • Has the bottom line increased or decreased in the last few years?
    • Almost everyone is experiencing increased costs. How you handle that is a key fact that impacts value.
  • Is one of your customers a high percentage of your gross?
    • Having one key customer represent more than 25% of your sales can be very risky for a Buyer. Handled properly, we can help mitigate this.
  • Is your industry expanding or contracting?
    • Do you own a Travel Agency? Or have you developed the latest app?
  • Does your business have trademarks, patents, exclusive rights, protected territories and more?
    • Being the only game in town often can be your business’s best asset.
    • Conversely, if you’re a gas station and you have 3 other competitors on your corner, you’ll(and us) will need to work hard to separate yourself and convince a Buyer you’re the way to go.
  • Are you working for the business or is the business working for you?
    • We’ve all heard this analogy. If you’re wearing all the hats in your business, it can be a hurdle for a potential Buyer.
  • Do you have long-term contracts from customers, or can they change who they buy from on a whim?
    • Having contracts in place can have a critical impact on value.
  • Your location:
    • Do you own your building?
    • What are your lease terms?
    • How much time is left on the lease?
    • Is the rent going up?
    • Are you paying market rent?
  • Is your location in need of an update? Have you invested in remodeling or rehab recently?
    • For retail businesses, the first impression can be a difference maker in not only gaining customers, but also in how a Buyer reacts to your opportunity.
    • Many Franchises will require an update upon transfer. Review your Franchise Disclosure to see what you’re obligated to do upon a sale.
  • New competition in the area or your industry?
    • Understanding your competition and their movements is a basic principle of business ownership. Your Buyer will key in on this and expect a thorough review of the competition.
  • Do you have long-term employees?
    • Now more than ever finding and keeping good employees is critical to a business’s survival. If you have well-established and loyal employees, we’ll be sure to highlight this and any other facts we feel will drive value.
  • Does your business require working capital?
    • Anything that adds to the purchase price will impact value. We work with the Buyer to be sure they are fully prepared financially to acquire your business.

There are many more factors to consider, but at the end of the day, not any one of the above will determine value. At Dunes Advisors we’ll help you find the facts that will get the highest price possible.

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