What Business Owners Need
Julie Keyes, owner of KeyeStrategies in Minnesota, is a value growth advisor for small businesses. At her most recent planners forum for Exit Planning, she discussed briefly what business owners need in the market today:
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Business Owners typically need direction from their advisors in the following ways:
Determining When to Sell a Business
When it comes to selling a business, it isn’t always a fast process, but it does pay to do it at the right time. That isn’t always possible, however, because family obligations, health issues and financial concerns may warrant a rapid sale. In the event that the sale isn’t being done in a rush, it makes sense to try and wait until the circumstances are most favorable, and that generally means at a time when the business is doing particularly well. Additionally, it generally benefits the business owner to sell when the economy is on the upswing and when the business is expected to continue to be profitable in the coming year or years.
Determining the Value of a Company
Today’s business owners need to take care not to shortchange themselves when setting the asking price for their pride and joy. With so many assessment options and tools available online and otherwise, it is becoming easier to find information about how to set the right asking price. That being said, many people choose to hire a professional to help determine the value of a business and ensure the business owner benefits from the sale to the fullest degree possible.
Typically, one of three methods is used to determine business value. One is to take an asset-based approach, which involves reviewing a business’s assets and then determining value based on the current market value of them. Some oppose this approach because it doesn’t factor in important variables such as future income projections of a company. Another, and possibly the most popular option, is to take an income-based approach. This involves looking at a business’s profits and then comparing them against any outstanding debts owed by the business to set the asking price. The third and final method is the market-based approach. This is something like the common real estate practice of looking for comparable homes in a neighborhood before setting an asking price, only it’s based on the value of similar businesses, not homes.
KeyeStrategies wants to help with Selling Your Business.
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