Having a ballpark idea of what your business is worth long before it is time to sell will help you avoid disappointments, and can ensure you get the price you need or want. The overwhelming majority of business owners don’t go through this exercise until it is time to sell. In most cases, the business owner no longer has the time left to change the narrative at that point.
If you have given thought to how much you need or want when it comes time to sell, the next step is to ask an experienced business broker to establish what can be expected as a reasonable price if you were to sell today. Most brokers will do this at no charge; I know I would. If the price falls short of what you feel you want to walk away with when you leave the closing table, it will allow you the time needed to do what has to be done to achieve your goal.
It is fairly common for a business owner to be thinking the value of the business is “x,” but that price was not established based on the market. It was established in a vacuum. When reality sets in, it is not a pretty picture.
I am not suggesting that you get an appraisal, which can be expensive. Rather, get an estimate of what you can reasonably expect if you were to sell today. Then ask what conditions would be needed for you to get the amount you think you would like to receive. Then figure out what you need to do to make it happen.
After this exercise, get an update on the estimated valuation every few years to make sure you stay on track to your goal.
As a seller or a buyer, if you would like a confidential conversation about how to prepare, please contact me on my cell, 954-579-4687, or by e-mail at firstname.lastname@example.org. My LinkedIn profile is at: http://www.linkedin.com/in/dolansales.