Tue. Oct 27th, 2020

World Trades

Finance Blog

How to evaluate your business and figure out the right selling price

3 min read

It is not child’s play to start and grow a business. You may have spent your entire life working hard to sustain your company. However, there comes a time when you have to sell your business or transfer it to your family. Once you grow old, you lose the energy to keep up with all the works. Therefore, the only logical option left is to move on from your business and enjoy a life of retirement.

Challenges before selling your business today

Of course, you cannot sell a business just like that. You have to take precautions and fulfill several requirements to make sure that you are getting the right value from the sale. Finding the right buyer is also an uphill task. There will be people, who are going to offer you about half the price of your company’s actual worth. Some might offer you more than the market evaluation but they could be fraudsters.

Selling your business is no lesser challenge than starting and running it. However, with the right guide and right assistance, you can do it easily.

Prerequisites for selling a business

Creating a checklist could be one of the best things you can do. It helps you do all the things accordingly in order.

You must also calculate the current market evaluation of your company. You should not, in any condition, go below this price.

You should contact buyers and shortlist them. You can shortlist them depending on their legitimacy and offered price.

How to correctly evaluate your business

Hiring a business selling broker is one way to evaluate your business. They stay updated with the market price and can instantly evaluate your business.

Another option, which is a little better, is to evaluate your business using any online business selling platform. You can use these platforms for your company’s evaluation for no cost.

You just have to input data like your yearly turnover, annual growth percentage, and last two years’ profit. Be as accurate as possible while inserting this data to find the correct price. You can use this price to determine the selling price of your company.

Things to consider during the sale

Make sure you have created all the documents properly. Manually check them for any errors. Once you are satisfied with the documents, proceed with the sale.

Do remember that you are going to pay taxes on this sale. Keep this in mind for deciding a selling price that will bring you more profit. Sole proprietorship has to pay taxes once that will include in your personal income tax. If you sell your stocks of a big company, you will be taxed twice. Do note this information before making any future transactions.

Online platforms are better for small business sales

A large corporation requires tons of paperwork to proceed with the sale. Generally, you sell your share in a large corporation as money of other people is also invested in it.

For small businesses, it is better to go with an online business selling platform. There is not much paperwork required for a small business with a single owner. You will also save money on the brokerage.

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