It is important to work out the value of your business prior to selling as it can help you decide on a selling price. It is a good idea to seek professional advice on how to value your business.
In order to value your business, you will need to prepare a range of documents. If you can’t afford to pay a professional for help with this, consider asking friends or family with bookkeeping experience.
Buyers may ask if they can value your business independently, so it’s a good idea to have your business documents organised.
You will need to prepare documents about finances and assets, legal matters, business procedures and plans, and staff, supplier and customer information.
Consider professional advice
If you can afford to, it is a good idea to seek professional advice through your accountant, a business advisor or a business broker on how to value your business.
These professionals can help you analyse your business finances, find trends within your industry's market, and help you work out which is the best method for valuing for your business. They can also help you calculate the goodwill value of your business and estimate your business' future profit.
An advantage of using a professional is that they may have clients who would be interested in buying your business, saving you the cost and hassle of advertising.
There are number of methods you can use to work out the value of your business. Some of these include:
- market conditions
- return on investment
- asset value
- the cost of creating your business from scratch
- estimation of future profits
Find out more about valuation methods.