Using an analogy of buying a big-ticket item, which people are more familiar with, a car, you would check that it had an MOT, the servicing had been done and look to see how many more miles it was going to be able to do before it became costly to repair or be scrapped. You would also consider what extras it has and how well the make and model holds its price.
Buying a business is similar, the buyer will look to see if it has audited accounts and what the future stream of profits will be, what it’s reputation is and what else might be a risk. One of the major risks could be that the owner is central to it all and the business will fail if they are not there.
It is clear to see that, if everything is in order a seller can command a higher price and the buyer will be prepared to pay that price. In other words, what it is worth will increase. Conversely, the things that will worry a business owner are likely to be the same things that need addressing to increase its value.
The sorts of concerns are:
- Is the profit stream secure?
- Will our customers keep buying?
- Are suppliers going to continue to trade?
- What happens if any of the staff leave?
- Will we have enough cash to pay our bills?
- What if I get hit by a bus?
Statistically, it has been proven that businesses which sell for a better price will score highly on eight defined drivers. Our Value Builder Survey can be used to assess how you rank on the eight drivers. Take the survey now, it takes less than 15 minutes to do and it will provide you with a starting place to increase the value of your business, regardless of whether you want to sell now or at some time in the future. http://ow.ly/dm2D30gqsaV