Selling Your Business – Step in the Buyer’s Shoes

One of the most important acts you as a business owner can do in determining the value of your business is to honestly ask yourself what you would pay for your business.

Try to step out of your emotional attachment to what you have created and into your accountant’s fun world. How much debt can the business carry and continue to pay a suitable salary. Are there any unusual risks such as a major client making up more than 20% of the revenues, reliance on a lease or license that is ending soon, or perhaps the failure to create systems that can be passed on? How many dollars are going to have to be spent to improve the equipment, facilities, and other infrastructure to get the business where it should be if you were buying it?

Finally does the business feel good? Are things like paint, carpet, signage, and furniture fresh? Do your employees have spirit and can you feel their pride? Remember, people buy on emotion and justify with facts. To sell a business both parts of the human equation, emotion and financial facts must work. Don’t expect anyone else to pay more for your business than you would or could.