How To Determine The Right Price For Your Business
Ways To Properly Determine An Approximate Value Of Your Business
When you are getting ready to sell your Phoenix business or a business in the metro area, you’re probably wondering how much your business is actually worth and what you can expect to net from the sale. Being able to accurately estimate the value of your business can help you set reasonable expectations, make better business decisions, and ultimately enable you to find the right buyer when you’re ready to sell.
A business valuation, performed by an experienced Business Broker, will tell you what you can expect to sell your business for on the open market. To calculate this number, your Phoenix Business Broker, who knows this area very well, will utilize various valuation methodologies that take into account, your business assets, earnings, debts, accounts receivables, and accounts payable, among other things.
If you’ve never sold a business before, you’ll be able to find some online resources that can help you determine an approximate value of your business. However, the most accurate and reliable way to calculate the value of your business is by working with a Certified Business Intermediary (CBI) in your local area who has experience in the field and will take all of the unique factors of your business into account.
Keys Components of Determining the Value of Your Business
Get Your Finances Organized
Since this process can be complicated, consulting a professional is very important. If you are anywhere in central Arizona, use a Phoenix Business Broker who understands how to properly value a business. Before you can even think about how to value your business, you’ll need to get your finances in order. Collect and organize documents, including:
You can expect any serious buyer to want to review your financials to understand how profitable your business is. Preparing this information will help you maintain realistic expectations about the value of your business and promote confidence and accuracy in your final calculations.
Calculate SDE
Once you’ve assembled your documents, start by calculating your Seller’s Discretionary Earnings (SDE). You will use your Profit & Loss Statements and tax returns to determine this number. The value of a small business is usually determined by the SDE of the business (By the way, SDE is what banks use to determine the value of a business for an SBA loan). Seller’s Discretionary Earnings (SDE) is defined as the earnings of the business before interest, taxes, depreciation, amortization, one owner’s salary/compensation, owner’s benefits, discretionary expenses, as well as one-time and non-business related income and expense items.
Take Stock Of Your Business Assets
Although it can be tricky to put a financial value on all the assets related to your business, it’s a necessary part of the process if you want to be compensated properly for the business you’ve built. Make a list of your tangible assets including inventory, furniture, fixtures, equipment, and company vehicles. Also, make a list of any intangible assets, such as intellectual property, and patents. Seek the advice of a Certified Business Intermediary (CBI) for guidance.
If You Are In Arizona, Work With The Best Business Broker In The Industry: Phil Reese
Phil Reese, CBI, is your #1 choice for selling your Phoenix business. He has extensive experience and a full understanding of how to properly value businesses. Phil can help you maximize your selling price and guide you through every step of the complex process of selling a business. Schedule your consultation today!

Written By: Phil Reese
Phil Reese – Arizona Business Broker
Phoenix Location:
Email: philreeseaz@gmail.com
Website: https://www.philsellsbiz.com
More from my site
The Legal Considerations of Buy-Sell Agreements The Legal Considerations of Buy-Sell Agreements A buy-sell agreement, also known as a buyout agreement, is a legal contract between multiple owners of a business. Buy-sell agreement can […]
Why Do People Sell Their Business? Why Do People Sell Their Business?There are many things to consider when selling your small business and many precautions to take along the way. The first thing is to identify your WHY? […]
How Do I Find a Buyer For My Business? That’s easy. Hire an experienced Business Broker to market your business and don’t try to do it yourself. Here are some of the things I do to market my listings and attract potential buyers!
“I Have No Intention of Ever Selling My Business.” I hear this alot from many Arizona business owners. My response to them is, some day you will no longer be involved with your business whether you like it or not. The bottom line is not […]
The Process of Selling a Business The Process of Selling a Business So, you’re thinking of selling your business and riding off in to the sunset, but how do you do that? Here are the 8 basic steps in the selling […]
How Are Business Acquisitions Financed? When buying or selling a business in Phoenix, it is important to know upfront how deals get financed so there are no surprises or false expectations.
Related posts:
- How To Maximize The Sale Price Of Your Business In Arizona How To Maximize The Sale Price Of Your Business In Arizona Increase Your Arizona Business Sale Price When you’re considering selling your business, naturally you want to maximize the sale price. But how can you accomplish that? Phoenix Business Broker Phil Reese is ready to explain the basics so you...
- The Process of Selling a Business The Process of Selling a Business So, you’re thinking of selling your business and riding off in to the sunset, but how do you do that? Here are the 8 basic steps in the selling process: 1. You make the decision to sell your company Why do you want to...
- What Are The Pros & Cons Of Buying An Independent Business Vs. Buying a Franchise? What Are The Pros & Cons Of Buying An Independent Business Vs. Buying a Franchise? Professional Business Broker’s Guide To Help You Decide Whether To Buy a Local Business Or a Franchise In Arizona You may have dreamed of owning your own business for a long time. You love the...
- How To Choose A Tempe Business Broker How To Choose A Tempe Business Broker Choosing the right Tempe Business Broker to sell your business is one of the most important decisions you will ever make. If you choose right, you will most likely end up selling your business and for the most money possible. If you choose...
- Business for Sale: How Long Does It Take to Sell? Business for Sale: How Long Does It Take to Sell? Arizona Business Broker Explains How Long It Takes To Sell A Business Once you decide to sell your business, you may be in a hurry to get it done as quickly as possible because financial difficulties or family issues have...
- Avoiding The Potential Pitfalls Of Selling Your Arizona Business Avoiding The Potential Pitfalls Of Selling Your Arizona Business What To Do To Evade Any Pitfalls When Selling Your Arizona Business When a business owner is ready to sell their business, it’s common to fall victim to some common pitfalls. The can-do attitude that got you started in the first...
- For Buyers Buyers Beware! Believe it or not, Buyers have a BAD name in our industry. Not real Buyers mind you because without them I would be out of business. It’s the pretend Buyers that cause the problem. We Arizona Business Brokers are fairly leery when someone calls us about a listing....
- For Sellers The Nine Money Losing Mistakes You Don’t Want To Make When It Comes Time To Sell Your Arizona Business! The difference between a profitable, smooth transaction and a miserable experience is often a fine line. The majority of business selling nightmares are caused by a lack of knowledge. The following...