When you buy a house, your Real Estate Agent can show you COMPS from other sales in the area to help you determine the value of your home. Businesses are a completely different animal because COMPS aren’t maintained on business sales. Most homes are purchased using a home loan where businesses are purchased using different types of funding. SBA Loans, Bank Loans, Lines of Credit, Seller Financing and cash are all common. Veteran Business Brokers often say a Business will ultimately sell for whatever someone is willing to pay for it. There are many factors that affect the pricing of a business but unfortunately there’s no set formula.

Business Owners usually prefer to err on the side of overpricing so they don’t leave money on the table. Buyers err on the side of caution and think most businesses are overpriced. It’s human nature depending on what side you’re on to think this way. When we sold our first business we were grossly overpriced and after a year of haggling with 3 different suitors we realized that overpricing a business is a bad idea.

When you sell a business you have 1 or 2 opportunities to sell it. Every business gets a buyer that’s actually willing and qualified to close a deal. Continue reading "No Two Businesses are Alike Which Makes Pricing a Difficult Proposition"