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Adding Value To Your Business

May 31, 2012

If you’re looking to sell a business, it’s critical to look at the value of the business.  A typical business really has two values.  The “academic” value is the one determined by a professional business valuation.  The other is the “true market” value.  The academic value is arrived at with a formula based on the firms’ hard assets, cash flow, industry averages and multiples.  The fair market value also takes those items into consideration, but then considers what buyers are really willing to pay.  For many small and mid-sized businesses hard assets like equipment, vehicles, land, buildings, and inventory may be limited.  For some small businesses there may be no hard assets at all.  Instead, their value is based on intangibles like employees, business processes, customer lists, location and business relationships.  To maximize the fair market value of your business, it’s vital that you capitalize on those intangible assets.

Keep these important intangible assets in mind if you’re looking to sell your business.  They convey a value that financial statements alone do not.  If you are looking to sell, make a plan.  Start working on the intangibles well in advance of putting your business on the market.  For many business owners, they reach a point where they burn out and psychologically retire early, before a sale is made.  It’s important to work to keep your focus right until the sale is complete. Finally, when the time to put your business on the market arrives, consider lining up key specialists who will help you make the most of the sale – an attorney for legal advice; an accountant for preparing financial statements; and a business intermediary for packaging, marketing and selling your business. Remember, you only have one chance to sell your business, so you want to do it right.

“Buying or selling a business is, in most cases, one of the largest decisions people will ever make in their life,” states Michael Naprawa, owner of Sunbelt Business Brokers in Nanaimo, BC.  “In saying that, the business intermediaries at Sunbelt do everything in their power to enable both buyers and sellers to make the most educated decision possible.”

Sunbelt Business Brokers is the largest global business brokerage with 300 licensed offices, 15,000 businesses for sale and 1,400 business consultants worldwide.  To see some of Sunbelt’s businesses for sale or if you are considering the sale of  your business, see or call our office at 250-751-7917 or toll free 1-877-289-0969.

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