You’ve worked hard to build your business and invested your time, money and passion into seeing it succeed. When it comes time to sell, you want to get the most that you can for all of that work that you put into your enterprise, and that’s why business valuation is of such importance. An accurate valuation will help you to make a fair profit from selling your business and also ensure fairness for buyers.
But just what is considered when creating an accurate valuation? Here are some of the key components:
- Cash flow – One of the most important considerations for buyers is what the cash flow of a business will be like. The most appealing businesses are those that produce a steady stream of income that is sizable. Buyers will also want to see that the cash flow will be sustainable even after you sell. If it’s your specific knowledge that helps your business rake in the dough instead of the quality of your products and services, your business may be less appealing.
- Assets – With business valuation, assets are always a consideration, but you may not have as many physical assets with an online business as you would with a traditional business. What’s more important with an online business is that your balance sheet reveals few liabilities.
- Documentation – If you want the most accurate business valuation possible, you’ll need to be prepared to share all types of documents with the CPA, appraiser or online business broker who is completing the report. Not only are your financials important, but you should also turn over things like sales and production reports, organizational charts, policies and procedures, operations manuals and similar documents.
When you’re preparing to sell your business, there are steps that you can take to help improve your valuation. An Internet business broker can advise you on some of the smart moves that will help you get the highest possible price for your company.