How to evaluate a business?
The need to sell your business arises fromfor a variety of reasons. Anyway, this is a private matter for every owner. But all sellers have the same question - how to evaluate the business, to assign a real price, which would completely reflect its value. This process is rather complicated, that's why the services of professional appraisers are very expensive. If you evaluate the business on your own, how to master the methods of price formation?
Sale of business in parts
So, dear sellers, before determiningthe price for your company, you need to ask, but why would the future buyer have this deal? Strangely enough, the price of the deal will depend on this issue. The first reason that you can be called a buyer is the sale of the business in parts or reselling it completely. For example, you have built shops on the bought land, they have equipment, cars. Your buyer can find customers for himself separately on the ground, on machines, on vehicles, may want to start the premises, or convert it for offices, for a shopping center, for a warehouse complex, and also rent out. An even more interesting story can happen - the buyer is not interested in property at all, he buys your business because of the brand that you promoted very successfully and he takes a leading position in the market. To sell such a brand will be very profitable later. In this case, your business will be sold at liquidation value. As you will not hurt, but it means the end of the case, and the value of the whole business will be composed of the sum of the prices of its individual parts - material property, land and brand (if one was created).
The second scheme by which a firm can be evaluated ison the income of the enterprise. If you see that the buyer of your production wants to continue and develop it, even if it will be re-profiled and reorganized, then the price should be set quite differently. Here we must take into account that the value of the enterprise will be equated to investment. Therefore, the new owner will receive not only property, but also all future profits. Therefore, all of the above should be included in the cost, and it will be an order of magnitude higher than in the first variant. This value is called investment.
And the third, the final diagram, telling,how to evaluate a company, this is a combination of the above two prices - investment and liquidation. It is this method that gives the most accurate estimated value. It should 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 receives profit from production and at a time - from the sale of the company's stake. This is for the seller the most favorable price. If your company is fairly well-known on the market, then among professionals, the rumor about the sale of the company will dissipate quite quickly, and it is best to choose such a proposal. By the way, to warm up the interest of customers, try to place information about the sale on all electronic bulletin boards.
To understand how to evaluate the value of a business,put yourself in the investor's place. All of them use such concept, as the payback period of the project (enterprise). That is, it is necessary to understand, for what term will pay off the means invested in the enterprise, and how soon it will start to yield income. This is the most accurate way to evaluate a running business. 10 years ago in Russia the average payback period of small and medium-sized enterprises was about two years. Today it's already 3 years. And big business pays off even longer - for 5 years. And in Europe, already up to 8 years! Large business requires large investments, but returns are faster. So, based on this, and consider the value of the business. For example, business is a stall selling periodicals. Brings in a month 50 thousand rubles of net profit. He is the property of the entrepreneur, that is, your private property. But the land is municipal, is in long-term lease. It can be returned to the municipality at any time if necessary. Consequently, the kiosk itself can be sold at a residual value, the equipment that is inside it and the periodicals are evaluated according to the same scheme. It is expensive to estimate the future profit, profitability and short term of turnover. Typically, the monthly net profit is taken, multiplied by 12 or 24 months. That is, the future profit for a period of 1 to 2 years is taken. It turns out that selling such a kiosk as a business is necessary for the amount of 600 to 1200 thousand rubles. Such a business many large firms prefer to buy first for a short time (very similar to rent), watch how sales will go, and then decide to keep this business or give it to the seller.
Evaluation of the business idea
Competent entrepreneurs can notonly an operating 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 supported by a patent, designs, plans and calculations? Whether there are samples of the goods, how fully the business plan is compiled - all this is very important also because it outlines the perspective of the payback period of the business. The buyer estimates its costs for the organization of production. And the seller should estimate how much money a buyer can receive per month, realizing this idea. Therefore, any idea is good in the presence of a competent business plan, on both sides of the transaction.
Valuation by franchise
Another way to estimate the businessis to find a franchise for the same kind 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 scope of your future price.