After working tirelessly to develop and grow your organization, you deserve to receive fair earnings. However, you must take a close look at your operation to determine its overall value and set an impartial asking price. Ultimately, a business is only worth the investment a buyer is willing to make. If you’re planning your exit strategy, review the following steps to learn how to price a small business to sell in Vancouver, Canada.
How to Price a Small Business to Sell in Vancouver
To set an asking price, you have a wide variety of factors to consider ranging from financial trends and tangible assets to brand reputation and goodwill. A professional valuation should be the ultimate deciding factor, but to get a better idea of what you can earn, move step-by-step through this list.
- Financial Standing
A good starting point is to gather financial records for cash flow, gross sales, and seller discretionary earnings. You should also prepare a balance sheet to demonstrate the worth of your tangible assets. Buyers prefer existing businesses that already own high-quality equipment and infrastructure, paired with full-time or part-time staff, processes, and other intangible assets.
- Market Trends
Even the most well-performing Vancouver businesses need a cooperative environment. Before assessing your business value, be sure to conduct a thorough market analysis to evaluate any shifting trends within your industry. You should also see if there is another business for sale similar to your own operation. We recommend contacting one of our business brokers to learn about nearby businesses with criteria similar to your industry and price range.
- Real Estate/Location
If included in the sale, you need to consider the real estate of your business, in addition to location. Whether you’re in the high-traffic epicentre of British Columbia, Greater Vancouver, or a less bustling region apart of the Lower Mainland, your location influences your asking price. Ideally, your facility has been maintained well and does not need any significant repairs or renovations.
A strong customer base is one of the most valuable assets you can transfer to a new business owner. Your start-up should have evolved to include a less concentrated customer base, with profits spread across a multitude of different accounts. One Toronto-based company learned this the hard way. After Celestia lost their biggest client, which accounted for 20% of their profits, they had to rework their entire business wheel. You’ll also want to consider whether certain clients may cancel contracts upon new ownership since some may remain loyal to you versus the business itself. If you aren’t confident you’ll be able to transfer a solid base of contacts, you may choose to reduce your asking price.
Determine the Value of Your Business in British Columbia
Each business opportunity presents its own strengths and challenges to overcome in a sales transaction. When considering how to price a small business in British Columbia, you have to look at your unique situation. Partnering with a business broker can reduce some of the stress and uncertainty that comes through this process. Small business owners choose Pacific M&A and Business Brokers Ltd. because of our success in facilitating profitable business transactions for both parties. Let one of our team members lend a hand! Get in contact with Pacific M&A and Business Brokers Ltd. today.