Knowing what your business worth
When deciding whether to sell your business or not, knowing what your business worth will help you make an informed decision. The overall value of your business will be influenced by the combinations of these factors:
- Cash flow trend
A good cash flow position is vital to your business and makes it more attractive to potential buyers. A business that shows stable or growing cash flow trends, supported by consistent profit margins will attract potential buyers.
- Nature of customer base
Potential buyers often consider a diversified customer base as a major factor in determining the value of a business. Long term and committed customer base indicate the capacity of the business to remain profitable. Dependence on a small number of customers, or key sales relationships will affect how the business is valued by potential buyers.
- Quality of management
Position your business to continue to run smoothly when you decide to quit. A strong management team and a workplace free from dysfunctional behavior or excessive turnover add tremendous value to your business.
- Competitive advantage
Identify the key differentiators that drive the value of your business. Factors such as being the leader in your industry, strong reputation, unique and recognisable brand, innovation, and advanced technology increase the value of your business.
- Product or service offerings
Differentiable and scalable product and service offerings will add value to your business.
- Hiring and training practices
In addition to quality management, ensuring that your employees are adequately trained is key to ensuring your business’ value in the market. Hiring and training practices that obtain, train, and retain the best people will enhance the value of your business.
Talk to our advisory experts about our business advisory services and how to help improve the value of your business.
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