What buyers, making a decision to buy a business, do in their mind, is to carry out a SWOT analysis (an analysis of a businesses Strengths, Weaknesses, Opportunities, Threats), and you should be aware that strengths to you might not be so for a buyer. They do not do this on paper however it is done in their mind.
A shop owner for example could quite easily increase his turnover and profits by opening longer hours and working 6.00am to 11.00pm but this can be seen as a weakness to a buyer, especially if they want a life/work balance.
The seller may regard the additional profits as an opportunity, but it may undermine the demand for that business if buyers are not interested in working those long hours.
A very profitable business may indicate a strength to you however if you have made your business too complicated not many people will consider it an opportunity.
You would think that if a business makes greater profits then its value must increase, however it depends on how that profit is achieved.
When you want to sell your business it is important that you understand whether certain decisions and features will increase or decrease its value.
Carry out a SWOT analysis from a buyer’s point of view otherwise you may end up with a profitable business that is not worth the money it should be.
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