When it comes to selling your very small business, the goal is to maximize your earnings while also pricing your business so buyers are interested. We could talk for hours about business valuation for very small businesses, but, for this post, let’s discuss one thing – the cost of starting a similar business.
If someone is thinking about buying a business, they are also thinking or have thought about starting a business. So, as you consider pricing your business for sale, you need to consider how much it would cost to start a business like yours.
Let’s consider an example of a auto repair business. To start one, a new owner would need money for all the required fixtures and equipment, as well tools to complete the work. They would need a lease with a security deposit, signage, shop supplies, etc. Then, it would take a certain amount of time to get the business going. There might be a few months with hardly any sales or income and then there will be a period of time (months / years) for business building. However much money this would work out to be serves as the baseline for how some buyers think about spending money. For most buyers, being able to buy an established business is worth some sort of premium over starting from scratch.
There are dozens and dozens of factors that influence your business valuation. The cost to start a similar is only one aspect.
As always, if you’re thinking about retiring or selling your very small business, let us help you through the process.
