For any business owner, making the decision to sell your business can be a bittersweet time of life. After all, you have spent late nights, countless weekends and given up a lot of your own personal time to build the business, and in some ways, it has become a part of who you are.
This creates a lot of problems for people in trying to accurately valuate or place a dollar amount on their own business. The emotional connection with the business, and all the hours behind the final product, are not necessarily reflected in the price, and in fact, they are really of little consideration to the buyer.
This is why in San Jose, CA, it is highly recommended to bring in a business broker to complete a valuation of the business. This professional will use one of several methods to arrive at a largely objective price for your company. The value can then form the basis of discussions around the price you wish to ask as well as the price you will accept.
The Over Valuation Issue
One of the biggest mistakes anyone can make is to try to sell your business at an inflated price when it first goes on the market. As the current owner you look at the value of your time, the potential you see in the market, and you may even value the customers that you have at the time as part of the price.
However, as a buyer, current customers, unless under contract, are not going to be of value. Likewise, the potential markets are just potential; there is no way to guarantee these markets will develop, so it is highly unlikely that you would be willing to consider these when making an offer.
Under Pricing
It is also not uncommon for a person in San Jose, CA to want to sell a business quickly. This could lead to underpricing the business by simply comparing it to other similar businesses and fixing a price of just under those asking prices.
However, unless you have the ability to know accurately what the other company is including in the sale, the price may be under market value. While this will result in a faster sale, it also means money left on the table that the buyer would have been prepared to pay.
Always get a professional business broker in before you sell your business. These professionals can work with you to bring in the buyers that are interested in your business, and to ensure you receive a fair price.
