When determining the value of the business, there are scores of factors that must be taken into consideration. Some of the most important points to bear in mind include:
- How will this industry change in the coming years?
- How does the economy affect this business now?
- How will the economy affect this business in the future?
- How has the company been able to compete in past years?
- How will this business retain its competitiveness?
- If property assets are part of the deal, how will they appreciate or depreciate?
What kind of merchandise inventory does the business have? - Are office supplies are included in this deal, and if so, how much are they worth?
- What sort of reputation does this business have in the community?
- How is the customer service and product reputation of this business?
- What is the financial standing of this company?
- What is the location of the business like?
- How will the location of the business change in the years to come?
- What sort of tax liability will this purchase be when I do my taxes?
- What sort of long-term return am I expecting on my investment?
Understanding how much a business is worth is one of the most challenging steps of the business purchasing process. It is important to investigate the likely outcome of the investment, and whether it will be an overall positive or negative venture. Even if the potential buyer is perfectly-suited to the industry, an unprofitable company is not a wise business investment.
