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What can contribute to the value of my business?

On Behalf of | Apr 22, 2022 | Business |

Selling your business will involve different actions which include placing the proper value on your enterprise. The most accurate value could help you reap the greatest possible price from a seller. To properly valuate your business, you should know the different aspects of your business which could contribute to its worth.

There are many different factors that can add or detract from the value of your business, but as Business News Daily explains, there are a few general areas that just about any business owner should look into while valuating a company.

Tangible assets

When it comes to assets, you probably think of the different material items that your business owns. These count as tangible assets. Common examples include your inventory and the equipment you use to manufacture your products. Tangible assets also consist of the property that your business owns, like real estate and company vehicles.

Intangible assets

There are also assets that do not have a physical form but are nonetheless valuable. Your business may own copyrights, trademarks or patents, all of which you use to generate profits. The recognition of your business brand among the public could also be of high value if the public associates your business with strong quality.

Business revenue and profit margin

A buyer will probably want to look at your financial records to see how well your business is performing. If your company takes in a healthy amount of revenue and reaps a profit margin that keeps your business in the black, you would have a good case to make to buyers that your enterprise is not a financial risk.

Business liabilities

Buyers generally want to purchase companies that do not have a lot of debt or other liabilities that could threaten to pull the business under. Your company liabilities can play a role in lowering your business value if they are too substantial and you do not have a cash flow to service them.

Many businesses have unique assets or characteristics that can add to their value. Investigating possible and even uncommon sources of value might help you come up with the most accurate value for your business.