What Factors Lower A Business’ Value?

As a business seller, you want to maximize the price that your business sells for. This means increasing the value of your business in comparison to similar businesses. If certain elements are missing from your business, it is harder to get a premium price for it.

Business Devaluation

What are some of the factors that indicate your business will sell for a lower value?
Customer concentration on a few major clients.

• Lack of written business plan, policies and procedures (it doesn’t do any good if this is “in the owner’s head”.)
• Poor financial performance or records.
• Distressed circumstances.
• Poor outlook for industry-regulations, competition, price cutting, taxes, material costs, etc.
• Heavy debt load, limiting seller terms.
• History of problems—employees, customers, suppliers, litigation, etc.

As many of these problems as possible should be resolved before putting a business for sale as any problems can make it take longer to sell.