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What’s My Business Worth? Easy Steps to Valuing a Business

What’s My Business Worth? Easy Steps to Valuing a Business


I’m Jon Hunt and I’m here on the Bayfront in
beautiful Saint Augustine. Florida. I’m a business broker and I work with
buyers from all over the world to help them find a business business that’s just right for them and I work with business owners to help them find an ideal buyer for
their business. Today I want to talk with you about how we can work together to determine
the fair market value of your business in today’s market. When I talk with business owners I often ask have you ever thought about selling your
business and it’s interesting how often I get the same response and that is I think about it every day. Perhaps you’ve
thought about selling your business either to retire, to relocate or to take
on an entirely new challenge. I can’t help you decide when the time is right for you to sell
your business but we can work together to determine
the approximate value of your business in today’s marketplace and that
basically comes down to three very simple factors: the nature of your
business, the annual revenues of your business and sellers discretionary
earnings. If I lost you on that last point sellers discretionary earnings don’t despair we’re going to walk through an example to
show you exactly how those are determined. Sellers discretionary
earnings sounds like a complicated term. In fact
some brokers use the term adjusted net some use SDE I prefer the term owner
benefits. It really refers to the net profit or loss of a business with
certain add backs such as amortization, depreciation compensation to the owner, a health insurance plan a car payment
even a cell phone payment. Any expenses that are benefit to you as owner are added back to determine total owner benefits. The easiest way to determine the value of
your business is to compare it to other similar
businesses that have sold. It’s very similar It’s very similar to what a residential real estate agent
might do in preparing comps if you decided to sell your home. When we talk
about comparing your business other businesses that have sold I use information on the database of
the Business Brokers of Florida. We have information on thousands of business
sales. For instance if we look at our database for pizza
stores that have sold I can do a search and I find two hundred and forty one
pizza stores that have sold in Florida and I can sort this information by the sold
sold price the and revenues or the owner benefits and that way I can
narrow the results too closely mirror those of your business. Okay let’s walk to an example of how we
determine an approximate value in today’s market. We work with tax returns. Profit and loss
statements and other financial records. Tax returns are the highest and best
Evidence. I know you’ll find a shocking but not all business owners report all
income on their tax return. But for an example let’s say that you have a pizza shop
with five hundred thousand dollars in annual revenues. Let’s say that this pizzeria had a tax
return profit of thirty thousand dollars. But that doesn’t represent the total
owner benefits. I’d make several add backs. For instance if the owner was paid thirty
thousand dollars and the business had fifteen thousand
dollars in depreciation and perhaps another fifteen thousand
four for amortization. Then I’d look for other common add backs such as meals and entertainment health insurance, a car payment or cell phone bill. Whatever business expenses benefit the
owner we add that back. So you can see then we total these it’s
easy to have owner benefits of more than one hundred thousand dollars. Our Business Brokers of Florida database reveals pizzerias is in this range sold
for about one point four times the owner benefits. This would the put the value of our sample at about one hundred fifty thousand
dollars. Once we determine your owner benefits I
can provide you with the lowest, highest and average prices paid for businesses like yours with similar revenues and owner benefits.
Pricing your business correctly is key to generating buyer interest. Buyers shy way from businesses that
are over priced. If you’d like to work with me to establish an opinion of value
on your business I forward to working with you. Simply drop me an email
please note that there are two H’s in the middle of this address or give me a call. I look forward to working with you.

Comments (42)

  1. This was a very helpful video in my understanding of what a business broker does and how you would actually determine the value of my business.

  2. Excellent information!

  3. Hi Jon, very informative video. Would love to know the value of my business. Not anywhere near ready to sell, but would be a good idea to find out. It does seem a lot like getting a real estate appraisal.

  4. You are so good on camera John!
    Very well done the video editing!

    Happy 2012!
    Vitoria from VTAcademy 🙂

  5. @EternalAdvertising1 Anytime you would like to work on the value I would be happy to help and there is no charge or obligation.

  6. Excellent Video Jon. I am anxious to work with you in finding another site.
    Happy New Year
    Fred Davoli Jr
    Davoli's Specialty Foods & Catering, Inc

  7. Great video and content. I wish I had your amazing voice.

  8. where do I get glasses like that.. very cool!

  9. Thanks so much. By the way the glasses are called Clics. I used to lose glasses all the time, but I have two sets of these and they've lasted very well.

  10. wonderfully done Jon, thank you for this 🙂

  11. A great video to explain owner benefits and how a value for a company (that is interested in selling) is determined. I loved it!

  12. Good info easily understood

  13. Great information!!!! love your tips!! thank you for sharing =D

  14. Great information. Now I know so much more about why brokers are important!!

  15. This is great information that my dealers sometimes need. I hope you don't mind me sharing this with my business owners?

  16. Excellent, this information is so helpful in considering a business purchase

  17. We deal with many small business owners, many of whom will face this issue. This video is a helpful introduction to the topic.

  18. Great Video thank you for the information Jon

  19. Great information!!!

  20. Thx Jon …very informative video.

  21. Jon: Great content! Loved the video

  22. Very informative video, I will be sure to pass this information to others who can benefit from your advice and insight!

  23. Outstanding video. Any business owner wanting to place a hard value on their business should watch this.

  24. Great content Jon, Thank you so much for the advice.

  25. Refreshingly easy to watch Jon, you're a natural. I learned a lot from how you produced this video. Best of luck with your sales and I'll be watching for future videos.

  26. Nice presentation. Lots of information. I like the call to action also.

  27. Great video Jon! HISC watched it together and enjoyed the presentation you gave. We would highly recommend you to anyone 🙂

  28. Great video Jon and very well explained .. just subscribe now want to hear more from you. Will be asking you in personal email If we can showcase your work on our websites. 

  29. Awesome video!  And an excellent presentation at our BNI!  I have learned so much from you and our group, I will know exactly where to go for anything!  What a great bunch of friends I have made also!  Thanks for all your help,  Dee

  30. Thanks Jon, always good helpful information.

  31. This is terrific, Jon. Great, helpful information! 

  32. I own a restaurant in Virginia and I'm looking into exit strategy's and trying to figure out what my business is worth. I viewed Jon's videos and liked them. so I decided to give him a call, though he is not in my area he provided me with excellent information. Being a business man I know full well nothing is free. He was easy to talk to and said I could call him anytime for help. His generous help at no cost was great, so my only way to pay him back is to let you know that he was a huge help to me. Thank you Jon for your help and professionalism.  

  33. I have worked with Jon, he is very professional and brings years of experience and knowledge to the table. He will tell you like it is. I highly recommend him.

  34. very helpful thank you

  35. Excellent video.

  36. The value of the business is ultimately what an informed and willing buyer will pay for the business. Sellers can get more than market value for their business if they create a competitive environment in which buyers compete against each other for the purchase. A business evaluation is a good first step but is only basis for a starting point. Get the maximum amount of money for your business by preparing, valuing, and marketing your business to attract multiple buyers. Not just one buyer.

  37. If you are a business broker in Florida and I live in Florida (just recently relocated) can you help me in selling my business in Colorado? Or do I need to find someone like you in Colorado?

  38. Im in Ohio, how can I contact you?

  39. I want to sell my business. Where do I start? We generate 1 M in sales annually. We are growing at the pace of about 20% (conservatively) per year. We have been in business 7 years and our equipment sales continues to grow. The business is booming right now and I expect growth for another 10 years. I’ll stay with the business for another few years if needed to continue growth, I just want to reach my goal of becoming a multimillionaire before I hit 40. I’m 38 now.
    Seriously inquiries only. I can see thru a scam, so don’t bother wasting your time. Your company will be thoroughly researched before I even call you back. I am looking for long term relationship as I have another business idea in mind.
    [email protected]

  40. hey Jon what is your email or contact info?

  41. Very informative video. Thanks for publishing it, Jon.

  42. Very nice john.
    Good video Dan,very thoughtful. I have a distribution Small company în EAST EUROPE and here aren't many company sales except for big ones or corporate. Id like to participate on events organised for the local business if there were. Ît s a pity i am liquidating a prophitable business with a solid client base grown în 7 years.

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