How to Determine the Price of Your Small Business in MN
Figuring out how much you should sell your business for is going to require a lot of work and asks you to look at all of the different aspects of the business. You will also have to take a look at how the economy is going because a bad economy means you might have to price your business lower than you think it is worth. The reason in which you are putting your small business for sale in MN could also factor in to how much you would like to sell it for. Here are some of the things you should consider when trying to price a small business for sale.
The first thing you should look in to when you are putting your small business for sale in MN is to price the assets. You will take all the items in your business and add the value of them together. This would include things inventory, equipment, buildings, and land. Add the liabilities together as well; these would be the things which you owe on for the business. Finally, take the liabilities and subtract them from the assets in order to come up with an estimate of the net worth of your business.
Multiples of Revenue Pricing
The next thing you should to when putting your small business for sale in MN is the multiples of revenue pricing. To do this you can add up all of the income you have made each year. Once you have done this talk to someone like a CPA or a business broker to determine the multiplier for the business you have. This number is going to account for the business type, the future of the industry, and where it is located. Now you can multiply the industry multiplier with the revenues to come up with a selling price.
Discounted Cash Flow
The final thing you can do is use discounted cash flow. To do this you can add all of your current year’s earnings; this will be the income you made after expenses were paid. Then take the time to look up the current rate for all your treasury bills. Divide the earnings which you made by the bill rate and you then have the price which you should put your small business for sale in MN.
As you will need to use a business broker when determining your company’s multiplier, you should consider hiring them for the entire process. Professional business brokers, such as Sunbelt Midwest, are experts at getting you the most for business.