Business Valuation - How to Value a Business 1-2-3

Business Valuation: How to Value a Business 1-2-3

How to Value a Business for Sale

If you are looking to buy a business, it is important to know an approximate value of the business before going into negotiations. You can't depend on what the seller tells you, as they traditionally over-value their businesses. You don't want to be investing too much money in your venture right from the start.

Having a third party come in and compute the value of a business can sometimes be the easiest method, since the third party is objective to the value of the business. If you decide to go this route, bankers, accountants and business brokers can assist in this situation

Although some business buyers hire professionals to appraise the value of a business for sale, it is not required, and you can actually use business valuation tools to help you figure out the value yourself.

Depening on the type of business you want to appraise, there are different methods of business valuation: asset valuation, capitalization of income, cash flow, market multiplier and tangible assets.

Asset valuation is commonly used when a company has a lot of physical assets, whereas capitalization of income is utilized when a company's value lies in it's intangible items. The market multiplier method involves comparing the value of similar businesses in the same industry, while cash flow valuation evaluates the cash flow of the business.

Websites for Small Business Valuations and Valuation Calculators

Before advertising a business for sale, it may be beneficial to get a business valuation by an appraiser or business valuation service. If the business has a website, general business valuations are provided for free with ebizvaluations.com and fastbusinessvaluations.com free online business valuation calculators.

If you need a professional business valuation report, Strategic Valuation Associates offers this service. You can see a sample report on their website. If you have real estate, business machinery or other equipment that you need to have valued, Cbiz Valuation Group offers a variety of different valuation services for businesses.

Websites to Buy or Sell a Business

BizBuySell is a popular site to list a business for sale. Their advertising rates start at $60 for a 2 month listing. You can also compare rates and services with Business Broker.net ($100 for 2 months) and BusinessMart ($35 for 1 month).