 | Steve Fischer is the president of Advantage Business Group in Wichita, an owner in the VR Business Brokers network of offices. With national and global reach, VR is one of the nation’s premier networks of professional business intermediaries. A life-long Kansan and previous business owner, Steve’s office exemplifies the service and professionalism that a business brokerage provides to the buyer and seller in today’s market. To learn more, visit www.VRplains.com or www.VRBB.com. Steve can be reached by phone at 316-262-8722. |
Business
2010-03-01 08:47:00
Why can’t I set my price?
Question: Why do I need a Professional Business Broker to determine an asking price of my business for sale?
Answer: When it is time to sell, many small business owners know exactly how they want to determine their asking price. How did they know this?
-I asked a friend.
-I checked the local newspaper or internet ads.
-I asked my accountant…..
-My attorney told me…..
-I invested that much and it has potential!
Or, they may also use the age-old seller’s valuation formula of:
Original Investment + Salary + Inventory + Assets + Whatever I Want = Selling Price
True to the above, there are many ways to determine the value of a small business. In the final analysis, it is the market and buyer who will determine the true worth of a business. A well-run business in a market segment that is deemed undesirable can struggle to sell, while a struggling business in a ‘hot’ sector can attract multiple offers. Utilizing the services of a professional not only helps an owner realize how a business compares in the local and national markets, but provides access to data and information not readily available to the public. Just as the business owner is skilled at running their business, a Professional Business Broker is skilled at helping determine an asking price.
To discuss all of the methods available to determine the value of a small business would require more space than we have in this article. It is best to contact a local Professional Business Broker to discuss specific situations to learn about business evaluations and valuation services. Locally based themselves, they will have insight into not only the Wichita, but national markets.
When interviewing a prospective Business Broker, be sure to ask how they intend to determine the asking price for a business. Be wary of the individual whose first priority seems to be selling a valuation. While this is a paid service offered by most Business Brokers, it should not be their first priority. Most brokerages offer competent evaluations and asking price recommendations based upon resources available to them. For those instances where it is advised to secure a formal valuation, insist the price for this service is deducted from any commissions due to the broker when the business sells.
Most professional business brokers offer valuable services to the business owners they work with. By properly utilizing this resource, an owner should be satisfied that the value and asking price for their business can be supported with reliable data and facts. A small business owner, considering the sale of a business, owes it to themselves and their business to seek counsel from a professional before making what could be one of the biggest decisions of their life.
