How to evaluate a business?
The need to sell your business arises for a variety of reasons. Anyway, this is a private affair of each owner. But all sellers have the same question - how to evaluate a business in order to set a real price that would fully reflect its value. This process is rather complicated, which is why the services of professional appraisers are very expensive. If you evaluate a business yourself, then how to master the ways of pricing?
Sale of business in parts
So, dear sellers, before determining the price of your enterprise, you need to ask, why would a future buyer need this deal? Oddly enough, but the price of the transaction will depend on this issue. The first reason the buyer can call you is selling the business in parts or resale it completely. For example, you have built workshops on the land purchased, they have equipment, cars. Your buyer can find himself buyers separately on the ground, on machines, on motor vehicles, he may want to start the premises, or convert it into offices, under a shopping center, under a warehouse complex, and also rent out. An even more interesting story can happen - the buyer is not at all interested in property, he is buying your business because of the brand that you have been promoting very successfully and he is a leader in the market. Sell this brand then it will be very profitable. In this case, your business will be sold at liquidation value. No matter how you feel hurt, this means the end of the business, and the value of the entire business will be made up of the sum of the prices of its individual parts — tangible property, land, and brand (if one was created).
The second scheme by which you can evaluate the company, it is for the income of the enterprise. If you see that the buyer of your production wants to continue and develop it, even if he will repurpose and reorganize it, then the price must be set in a completely different way. Here we must take into account that the value of the enterprise will be equal to investment. Therefore, the new owner will receive not only property, but also all future profits. Consequently, the cost should include all of the above, and it will be an order of magnitude higher than in the first version. This cost is called investment.
And the third, final scheme, telling how to evaluate a company, is a combination of the two prices described above - investment and liquidation. This method gives the most accurate estimated cost. It must be installed when your buyer is a professional investor who is engaged in the acquisition and further development of the enterprise. Such an investor rarely remains for a long time the sole owner of the company, he finds a part of its buyer, invests money in development, then makes a profit from production and at the same time from selling the company's share. This is for the seller will be the best price. If your company is quite well-known in the market, then the rumor about selling the company will spread quickly among professionals, and it is best to choose such an offer. By the way, to stir up the interest of buyers, try to place information about the sale on all electronic bulletin boards.
To understand how to assess the value of a business, you must put yourself in the place of an investor. All of them use such a concept as the payback period of a project (enterprise). That is, you need to understand how long it will pay off the funds invested in the enterprise, and how soon it will begin to generate income. This is the surest way to evaluate a working business. Just 10 years ago in Russia, the average payback period for small and medium enterprises was about two years. Today it is already 3 years. And big business pays off even longer - in 5 years. And in Europe right up to 8 years! Large business requires large investments, but the return is faster. So, based on this, and consider the value of the business. For example, a business is a stall selling periodicals. Brings a monthly net profit of 50 thousand rubles. He is the property of the entrepreneur, that is, your private property. But the land is municipal, is in long-term lease. She can at any time be returned to the municipality if necessary. Consequently, the kiosk itself can be sold at residual value, equipment, which is inside it and periodicals according to the same scheme. Expensive can be estimated future profit, profitability and short term turnover. As a rule, the monthly net profit is taken, multiplied by 12 or 24 months.That is, the future profit is taken for a period of 1 to 2 years. It turns out that it is necessary to sell such a kiosk as a business for an amount from 600 to 1,200 thousand rubles. Many large firms prefer to buy such a business first for a short time (very much like a rental), look at how the sales will go, and then decide to keep the business or give it to the seller.
Evaluation of a business idea
Competent entrepreneurs can make out not only the existing business, but also their thoughts at the stage of business plans. In this case, you need to know how to evaluate a business idea. The price of it depends on many factors. Is it backed up with a patent, designs, plans and calculations? Whether there are samples of goods, how fully a business plan is drawn up - all this is also very important because it draws a perspective on the payback period of a business. The buyer evaluates their costs for the organization of production. And the seller must estimate how much money a buyer can receive per month by implementing this idea. Therefore, any idea is good if you have a competent business plan on both sides of the transaction.
Another way to approximate a business is to look for a franchise for the same type of business.Look at how much franchising costs, multiply this amount by 12 or 24, and get the value of your business. The method is very approximate, but it gives an opportunity to present the framework of your future price.