Business valuations are not an exact science and there are several different methods that can be applied, depending on the type of business you have. 
Ultimately a business is only worth what someone will pay for it but there are things you can do to maximise the potential value when you decide it's time to sell.  
Methods to value a business 
Typically a business will be valued based on future maintainable earnings or value of assets (particularly where there is a strong asset base). In some industries there are specific methods that only apply in that industry. 
Factors effecting valuation 
There are a few things that will typically influence the value a prospective purchaser will put on the business, and these are: 
strength of the management team – the business needs to be able to run without you in it. If it’s all based on you being there that will negatively impact the value 
competition and barriers to entry – if anyone can set up doing it tomorrow then it’s likely to hold less value than something that takes years to build up 
customers and products – having a long term loyal customer base that repeatedly buy from you, and having popular and innovative products that sell well will promote more value than a business that relies on constant new leads 
quality of the asset base – if the business owns significant fixed assets or property this may be more attractive to a purchaser than just the operating business 
opportunities for future growth -if a purchaser can see obvious new opportunities for them to make more profit this will increase the value 
How do you prepare the business to get maximum value? 
Start by getting systems and processes in place so that the business can operate without your direct or daily input. Then ensure that your team know what they’re doing and have development plans and a structure that can be easily monitored. 
Regularly measure and monitor how well the business is achieving the KPI’s you’ve set and be prepared to change things to ensure you stay on track.  
If you’d like to understand more about the actions you should be taking to get maximum value, or you’d like us to value your business get in touch to book your meeting. You can contact us here >>> contact us
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