Five Tips to Business Valuation

Ready to sell your business in the great state of Minnesota? You must understand that the buyer, not you, determines the value of your business. Here are five essential points for business valuation Minnesota business owners should remember.

1. Restate Financials to a Common Format
If you want to sell your business, you need to restate the Profit & Loss report to reflect the net income of the enterprise. If you are drawing a salary, that amount should be placed back into the profit column. Certain expenses are not counted as well. Profit is king. Buyers want a format common to all business financials. Give them what they want.

2. Determine Inventory Value
Inventory is a separate issue. The value is subject to negotiation. Be prepared for a low offer “to do you a favor and take the materials off of your hands.” You should be ready to counter the offer. This is a critical issue for retail and manufacturing enterprises.

3. Define the Intangibles
This is where you can make the case that the business has advantages to the buyer.

* Location: Make it a plus, especially if it is located in a busy shopping mall or situated on a popular tourist spot such as a lake or fishing village.

* Market: State if the market is thriving and has great growth potential. Give ideas on how to grow the business. For example, your firm creates fishing rods and reels. You can show that other fishing accessories can complement the distribution channels. State the value of your “brand” and how to expand the product line.

* Labor: Stress the work ethics of your team. Show the backgrounds of your management team and the employees.

4. Develop a Sales Package
In order to achieve maximum valuation of your business, you need to show the business visually as well as financially. Consider a video of the shop with happy customers interacting with your employees. Include customer testimonials, employee comments, and show the location of the enterprise. This is the time to make your business shine!

5. Offer Seller Financing
The best way to increase business valuation is to show you have confidence in the business by offering a three-year note with a 50% down payment. This “icing on the cake” will attract motivated buyers.

Need help in valuing your business in Minnesota? Visit Increase your business value with their counsel to make your business shine with the buyers.

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