QUESTION: Recently I have been considering retirement, I have own my small business for about 25 years. I have had offers to buy my business, but how do I know what it is worth?
— Lincoln
ANSWER: It is worth whatever the market is willing to pay. That doesn’t mean you are willing to accept it.
It sounds like you have had multiple offers to purchase your business. Each of these offers considered your business to have value in how your business has operated. This “market value” should be clearly understood for the both the buyer and seller.
Clearly understanding why the offer was calculated the way it was, helps you as the seller in accepting or rejecting. One of the offers may have found value in the business’s tangible assets, such as its building or equipment. This offer may not “value” your business name, your inventory or even your past customers. All they really care about is buying the building or equipment. This can easily be determined through a commercial real estate appraisal or an equipment appraisal.
Another offer may be considering your business name, your business model, the systems and processes you have developed over 25 years of operation. They may view the “value” through continuing to operate the business as it stands currently, making no changes or adjustments. Ideally, the value associated with this view is translated through the earnings or profit of the business in a calendar year. All of your systems, methods, and processes should translate into a consistent earnings stream of capital.
Another offer may be considering a variation of both, keeping some of your original business and changing others.
Regardless, knowing how the potential buyer is viewing the value of your business, may help you in your consideration. You may be viewing the value in your business different than a potential buyer. Having a clear view of what the buyer is considering valuable in your business will help you in accepting, rejecting, or negotiating.
QUESTION: I have been struggling to get my business into social media. We have a presence in each social media outlet, but I am not sure it is working. Any suggestions?
— Nebraska City
ANSWER: I would first examine your definition of the word “working.” Were you expecting to increase sales? Were you expecting to increase customer awareness of your product or service?
Defining what you would consider a success is important for any marketing plan, regardless if it involves social media or not.
Once you have established clear marketing objectives or goals, then you can examine the promotional strategies that would best achieve those objectives. These objectives need to be specific allowing you to measure them accurately and may include increasing customer activity such as the number of customers walking into your store, or calling or emailing, whatever the activity; define it and be clear on what you expect to happen.
Having a clear objective will help you as a business owner in making decisions and analyzing the results. Social media should be just a means to achieving your objective, instead of using it just for the sake of using it. Your customers may not be even on social media.
Regardless, social media may or may not be the best or most cost effective way in helping your business reach its objectives. Clearly defining and measuring your objectives will help you in understanding if social media helped your business, hurt your business, and by how much.
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For additional information regarding Florida business sales, acquisitions and valuations, please contact Eric J. Gall at Eric@EdisonAvenue.com or 239.738.6227. Also, visit our Edison Avenue website at www.EdisonAvenue.com or my personal website at www.BuySellFLbiz.com.
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