What is Your Business Worth?

Posted on Jun 28, 2012 | 0 comments

What is your business worth? And how can you improve the value?

What your business is worth right now in its current state and in the current market is vital if you plan on selling now or you are thinking of selling all or part of it in the next few years.

By “current state” we mean the condition of the business if it was put to the market tomorrow without making any changes to management, operations, finances, marketing, systems, etc; what you see is what you get.

By “current market” we mean selling into the Australia wide market without financial pressure in an arm’s length transaction – willing buyer and willing seller, not a fire sale.

Most small to medium sized businesses inAustraliahave seen a decrease in profitability since the GFC. Typically this means that the value of the business using traditional valuation techniques has declined in proportion to the decline in profitability.

So what does this mean for business owners?

It means that if you are seeing a decline in your year on year profits it is highly likely that the value (the sale price) of your business is also declining.

So what can you do to improve the value of your business if you are planning on selling?

There are essentially seven factors which have the potential to impact the value of your business and each of these can be influenced and to some extent controlled by the business owner.

Taking control and implementing strategies aimed at improving each of these seven drivers has the potential to add significant value to your business.

The seven drivers are:

  1. Owner reliance
  2. Customers
  3. Innovation
  4. Profitability
  5. Staff
  6. Systems
  7. Succession planning

We will discuss each of these in more depth over coming months. And we will provide some powerful tips on how to improve the value.

If you’d like to know more now, just contact us and we’ll be happy to explain further or got to www.jwabusinessvaluations.com.au.

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