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Does my small business have a value?

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Most businesses do have value – even small, owner-run ones – it’s simply a question of degree. The businesses that are most sought-after by buyers are those that are generating healthy profits, those with potential for growth and those that can be transferred to new management with the minimum of disruption – in short, businesses that offer the promise of a good return on investment. 


If you’re thinking of moving on, it’s worthwhile taking time to plan your exit so that you can cash in the value you’ve built, rather than leaving it to fizzle out and disappear. Don’t be tempted to start winding down – if you can go the extra mile, you’ll profit from your hard work when you make a sale. 

Tame your paperwork

The only way to make an accurate assessment of business value is by undertaking a forensic review of your paperwork, getting your finances in order and detailing revenue streams, together with assets and liabilities. Not only will this help you to get a better understanding of potential value but it will also make it easier for a prospective buyer to see what’s what. If you can put some thought into business planning, you’ll also be able to demonstrate the opportunities for growth.


Pin down your assets

If you own buildings or equipment, they’ll have residual value – with or without your business – so make sure your assets are inventoried and correctly appraised. Even assets that you don’t own – such as leases and exclusive contracts with suppliers – will contribute to the final value of your business and could bump up the bottom line.

Take yourself out of the picture

One of the factors that could adversely affect business value is how closely its success is tied to you. Any prospective buyer will want to see that the business can be successful without the stewardship of the incumbent, so plan for a handover in good time and ensure you have the infrastructure and systems in place to show purchasers that you’re no longer needed.


Tempt a start up

It’s useful to weigh up the value of your business against the costs a potential buyer might face, were they to start up a similar enterprise from scratch. Even if your profits aren’t where you’d like them to be, you could impress a purchaser by offering a business that’s staffed, operational and ready to go.
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