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Value the Company
Valuing a business is a mix of art and science. The bottom line, of course, is that a business is worth what a buyer will pay. Nevertheless, you need to come up with a defensible asking price. A qualified business broker should be able to do this for you. In fact, a business broker who merely lists the business at your asking price, without regard for how you decided on that price, is not doing his job, either out of laziness or incompetence.
If yours is a business doing annual volume of over 2 million dollars, or if profits are over $150,000, you might want an independent appraiser to value the business. An independent opinion from an experienced appraiser can at the very least serve as a check on the business broker's opinion, which is less independent. The broker, after all, is compensated based on selling the business, and this may cloud his or her judgment.
You may also want to consider using web-based valuation software. A quick valuation can be obtained from http://freevaluationsonline.com. This valuation will include a both a web page and a pdf report that shows the calculation of your business's value based on the excess earnings method. The calculator asks some basic questions about your business and its financial performance and creates a valuation and an optional report that you can read, download, and print. A more comprehensive, but still easy to use online business valuation is available from another of our websites.
Several methods of business valuation are presented in the section Valuing the Business.