Entrepreneurs across Shropshire could be missing out by underestimating the value of their small business. Dyke Yaxley Director, Mark Bramall, said research had shown nearly half of entrepreneurs planning to sell their business were unaware of how much it was worth.
“The problem is particularly common with small business owners, with only 37% of those interviewed having a clear idea of the sale value of their assets.”
But Mark said it was perhaps not surprising that entrepreneurs were struggling as there was no precise formular to calculate the value of a business, and an actual valuation would depend on a combination of factors.
“The size of your business will definitely affect the value – larger firms are perceived as less risky and so generally attract a higher price, even if they are less efficient than smaller competitors.
“Buyers may also be prepared to pay more for businesses with high growth rates as they repay the investment more quickly, so you might want to consider selling your business before your turnover and profits level out.
“If you have diversified and have a wide business mix, the price may be affected as some buyers may only be interested in one area or market. The size and quality of your customer base will also be important.
“Profitability, cash flow and financial management will all be vital too when it comes to securing the very best price for your business.”
But Mark warned that just as undervaluing a business meant entrepreneurs would miss out, overvaluing it was equally as damaging.
“An inflated asking price will put buyers off, or make them think you’re not serious about selling.
“But ultimately the value of your business will be determined by the number of buyers for your type of business and the number of similar businesses for sale.
“Your business is only ever worth what a prospective buyer is prepared to pay for it, but professional advice can help you calculate a reasonable estimate, and advise on steps you can take that will help maximise the value.”
Dyke Yaxley Director, Mark Bramall