There are a variety of factors about your business that will help determine its fair market value. But the most important element that many business owners neglect is their organization.
Your financial and asset records are the lifeline of your business. If you do not have the following documents easily accessible, it could cost you.
- A short bio (a paragraph) explaining the nature of your business
- Tax returns from the last three-five years
- Profit & Loss statements from the last three-five years that you or your accountant prepare annually
- List of any inventory with approximate values
- Full list of all fixtures and equipment used in the business that would be included in the sale, plus a grand total value of the whole
- Copy of current lease, if business premises are leasehold
- Copy of latest appraisal(s) if business premises are freehold and/or additional real estate will be included in the sale
Your business broker or business appraiser collects data about your business to establish an opinion of value. Forgotten loan agreements, overlooked expenses, or an inaccurate inventory of your equipment can be a blow to determining value.
If the job has yet to be done, and the task at hand seems too daunting, then ask for help! Many owners forget that they are only human and cannot do it all. Ask for referrals for professionals who can help you get back on track. It’s worth the investment.