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How to Value a Business

It's easy ask anyone and they will give you a different answer but a business is only worth what someone will pay for it. If you market a business correctly it will sell at the correct price, if no one wants to see the business it's been valued wrong.

For your check list to value a business you need to look at:

Turnover    Opening hours    Gross/Net Profit    Competition    Fixtures and Fittings    Assets

Location    Staffing    Rent and rates    Accommodation    Current market trends

Now you have this information, we know the price that other businesses have sold for so we can then compare different businesses to achieve an accurate business valuation.

The less you have to work to generate the most amount of money the more your business is worth e.g. Two identical businesses with the same turnover but the business with the higher rent is worth less.

There are some rules of thumb to value a business but they are not valuation tool but examples e.g.

    Accountants will tell you a business is worth three times the reconstituted Net profit - this does not work because a newly fitted business would be worth more than that needs a refit and does not take into account how the business is run.

    One business for sale website has stated in their buyers guide that a business is worth between three and nine times the Net profit - Using this scale a business with a Net Profit of £50,000 would be worth between £150,000 - £450,000 - this is to broader range to be of any use.

    One year's Gross Profit - does not work as take no account for expenditure, fittings etc.

Every business has potential to increase turnover you should not over pay for potential you see and should only pay for what you are getting why take all the risk if you are not getting the reward.

In my opinion a return on investment in three years plus any fixed asset e.g. buildings, cars and stock is a more likely opportunity to be taken up.

We are please to give you a free no obligation valuation and remember Nationwide Businesses unlike most other agents run on a no sale no fee basis, we advertise in all the leading Business for sale website and on Facebook, Twitter and other social media website to achieve you a fair market value for your business.