Most business owners in Minnesota and across the country have only a vague idea of the actual value or worth of their business. Often this vague notion is inaccurate because of the methods that the business owner uses to arrive at the final value.
Before making the decision to sell a business, it is a very wise decision to have a business valuation completed by an experienced business brokerage. This will provide the business owner with an accurate picture of a fair market price for the business and help them to make the decision to sell or to hold onto the business.
The Actual Value
With a comprehensive Minnesota business valuation, a fair market value can be set that meets the needs of the seller and also ensures a timely sale. Typically, business owners overestimate the value of their business as they often include intangible costs such as the hours they have spent in building the business and even a direct dollar for dollar cost of business renovations.
Overpricing a business will limit the opportunities for a sale. It can also lead to frustration on the part of the business owner. Businesses that are on the market for extended amounts of time are also more likely to lose key employees as they seek work in a more stable environment.
Prepare for the Buyer
Having a business valuation allows the seller to be prepared for any counter offer the buyer may make with regards to the purchase price. This can also make the buyer more confident that the asking price is accurate, as they will most likely have a broker in place that will do an estimate of the value of the businesses that is similar to the type of calculations completed by the seller’s broker.
Identify Areas to Strengthen
With a small business, there are always areas to improve upon before the business is put on the market. With an experienced business broker completing the valuation the business owner can be made aware of the issues that are potential obstacles to the sale.
Simple things like having written agreements or contracts with vendors and clients, updating old technology or delegating roles and responsibilities to managers can all make a business more attractive to potential buyers without a lot of cost to the seller.
Any Minnesota business owner should have a valuation completed as part of the decision to sell. By choosing a trusted business brokerage to complete this confidential valuation, you will have the information needed to determine if this is the right time to sell.
