Even if you don't have any immediate plans to sell your business, obtaining a valuation of your business can be useful as part of any potential exit strategies. Knowing the true worth of your business can also help inform your future projects, and even encourage some to pursue growth strategies to build on their success.

Unfortunately, valuing a business is far from straightforward. There are a lot more variables involved in buying a company rather than similarly large investments such as property. In fact, a company's premises can be just one of the many factors that need to be considered when valuing a business.

For this reason, it's strongly advised to consult a specialist business sales team to help directors to arrive at an accurate figure that represents a company's true worth to potential buyers. But what aspects do experts take into account when constructing a valuation? Here the specialist business sales team at Forbes Burton shed some light on the factors that achieve the best prices.

Assets

This is what most people think about when determining the worth of their company, and as the most tangible factor on offer, it often makes a big difference. Particularly valuable assets include properties, company vehicles, and specialised equipment.

Other valuable assets may not be so obvious, however. Intellectual properties such as trademarks, copyrights or patents can actually be what the whole business is based around. A company with exclusive rights to a particular area can be particularly attractive to buyers.

Debts

Any outstanding liabilities and debts can have an adverse effect on any valuation. It's best to try to settle any debts before a potential sale in order to secure the best price, but not essential. Many businesses are sold with debts still outstanding, which the new owner takes on alongside the rest of the business.

Financial performance

Accurate valuations rely on historical and current performance, as well as projections for the future. While a profitable business will obviously be more valuable, there are still plenty of buyers interested in struggling companies. Such prospects often provide the opportunity to inexpensively acquire a company that has the potential to be turned around.

Current balance sheet

A healthy balance sheet not only provides a snapshot of how a business is doing, but also allows potential buyers to determine assets, debts, and shareholder equity at a glance. This information can be invaluable to buyers, allowing them to see what resources are available to the business, and determine their liquidity.

Growth potential

If you've ever looked into expanding your business, your original research may well be of interest to a potential buyer. Plans to extend your premises, introduce new product lines, or open up new branches can demonstrate that growth is viable and provide extra value to your business.

Contracts and leases

If your business has been operating for a while, or you've been able to forge strong working relationships with your suppliers, you may have valuable contracts that a buyer might be interested in. In a share sale, buyers take on businesses as a going concern, and when contracts are already in place, it makes their job a whole lot easier when they eventually take the reins.

Well-priced contracts aren't necessarily something that can be duplicated elsewhere, so businesses that enjoy them can be well sought after. Similarly, favourable rents that are locked in for a particular time frame can also draw interest from buyers.

Ongoing projects

If your business has secured a particularly lucrative job, or finds itself in the midst of one, this can provide significant instant returns on a buyer's investment. As such, any valuation will benefit from large jobs already in the pipeline.

Integration with other businesses

Two different businesses could enjoy similar success, but if one lends itself better to integrating with a buyer's existing business, it suddenly becomes more valuable. Directors can avoid huge expenses and organisational headaches by finding a business to buy that integrates easily with their other companies. This is a huge bonus to such buyers, and they'll happily pay extra to secure such businesses.

Specialist staff

If your industry historically has trouble hiring skilled staff, you may find that your more experienced employees can actually add extra value to your business. The hiring process can be expensive and fraught with problems, so a strong workforce already in place can be a real sales feature .

Market share

If your business is only one of many similar companies in the area, it will have to be one of the market leaders to achieve the best price. Those with little competition, either locally or online, carry far less risk for buyers, and as such, can command a higher fee.

So, what is my business worth?

With so many factors to consider, it's strongly recommended to speak to a specialist that can give you an accurate valuation. Online business valuation calculators exist that can give you an idea of what you can expect to receive for your company.

If you prefer to talk through all of the different aspects of your business to glean the most accurate valuation, however, Forbes Burton provide free, no-obligation consultations. Not only does this give you a figure to work with, but they'll also advise on the best steps to take should you want to sell.