What’s the business worth?
Sellers frequently have an inflated idea about what their business is worth. So, don’t assume the asking price is reasonable. There are “rules of thumb” for business valuations. Tom West’s “Business Reference Guide” is an excellent source of information about the valuation of different types of businesses (for more information go to Business Brokerage Press). Why is the business for sale? Understanding why the business is for sale gives you insight into the market and the business potential. Reasons for sale vary greatly. The implications are quite different if the seller has health problems or if the seller wants out because of declining business conditions. Should you work with a business broker? A knowledgeable and professional business broker can be an effective intermediary and assist in negotiating the deal. Remember, the business broker usually represents the seller, not the buyer. Making an offer – with contingencies. Once you’re decided on a price and you’re ready to make an o