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Options To Value A Business In MN

As a buyer or a seller, knowing what a business is actually worth from an objective and accurate assessment is essential before a sale or an offer to buy. For the seller, knowing the value helps to set a realistic market price that will move the business and also provide a fair return on the investment. For the buyer, taking the time to value a business helps to understand a fair offer to purchase. For any business owner selling a business anywhere in Minnesota (MN), taking the time to have a professional, experienced business broker complete a business valuation is an essential stop. Once you know what the actual value is based on that process, you can then decide if this is the right time to sell. Valuation Options Different professionals may value a business based on different techniques and methods. Sometimes the choice of methods used to obtain the market value is a direct factor of the type of business. In other situations, there may be multiple options to use and the professional completing the valuation should choose the one to provide the most accurate information for the seller. The most effective options for most small businesses will include considering the assets owned by the company that are part of the sale, but at their current cost, not at their new replacement cost. Additionally, the valuation will also consider if you own the building or rent and even what the industry trends are for predicted future sales. In general, just looking at revenue is only a partial picture of how to value a business. These types of methods typically use a formula based on the industry that multiplies the revenue by a factor to arrive at a rough value. Non-Financials As an MN business owner understands, not all the revenue or value in a business is revenue streams and assets. There are also issues to consider such as locked in low-cost contracts with vendors, ongoing contracts with existing customers for future products and services as well as the company reputation. Even issues such as having the management team in place to stay through the transition to the new buyer can be of value and should be considered in developing a market price. Ultimately, as the business owner, you will set the price. A smart business owner will work closely with their broker to determine a price that brings in a profit, but also ensures the business sells quickly once on the...

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3 Factors To Consider Before You Buy A Business In Minnesota

The idea of owning and business and being able to make decisions and have the freedom to do what you want in your career is a big attraction for many people in Minnesota. Knowing if you are the right match for a particular business, or even if you are a person who will enjoy being a business leader, will be critical in taking the plunge into business ownership. Unfortunately, too many people who decide to buy a business don’t take the time to consider these important issues. They often have a very misguided impression of what it will entail being a business owner and they may quickly find that what they assumed they were getting into is nothing at all the reality of the position. Owner or Owner/Manager There is a difference in being a small business owner and being a small business owner/manager. Many small businesses are owner/manager models, where the current owner is also the manager handling all the day-to-day decisions and problems with a very active role in all operations. To take on this responsibility is a big step without a lot of freedom, very little in the way of time off and often a very steep learning curve. Many of these businesses will be sold with the current owner staying on to train the next owner, but that will all need to be considered in the negotiation when you buy a business. Understanding of the Industry and the Business Even if you are going to be more of an owner and less of a manager, which usually means a successful and trained management team is already in place and remaining through the sale, you still have to make decisions based on the business as well as the industry. Often individuals buy a business because of an interest in the industry, but without any real working knowledge. Take the time to research the industry. This includes trends in the market in that sector and even changes that are being anticipated in the future to determine if this is still a business you want to consider. Where Do Customers Come From? By understanding the current target audience for the product or service the business offers, you can get an idea of where you can expand and what potential there is for growth. Not being sure or failing to have a plan to continually increase the customer base when you buy a business is a very common mistake. Without this information in place, even the most profitable businesses in Minnesota will see a drop in revenue after the purchase, which can create cash flow problems that put the new owner in a very difficult...

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