We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

How do I get the Most from a Small Business for Sale?

By Carol Francois
Updated May 16, 2024
Our promise to you
WiseGeek is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At WiseGeek, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

When determining the value of a small business for sale, there are several important factors to consider. Although this decision is often an emotional one, it is important to remember that the dollar valuation is based on the current financial information, past activity, and potential future growth and revenue levels. There are four methods used to increase the valuation of a small business for sale: financial statement reporting, goodwill evaluation, market trends and future projections, and identifying factors that impacted negatively on revenue.

When selling a small business, it is important to involve your accountant, lawyer and senior management of the firm. An honest appraisal of the strengths, weaknesses, and potential revenue opportunities are important to document when preparing a business for sale. This process is much like selling a house or a car. The first step is to clean up the asset, make the cosmetic changes to increase its initial appeal, and then be prepared to negotiate the terms that you require. Have a clear idea of the upper and lower limits you are willing to accept, time lines, and any management responsibilities that you may want to continue in the new business structure, if any.

Any potential purchaser will automatically request the financial statements for the past four years of operation. It is important to note that the base assumption is that these statements have been audited, which is not always the case for small businesses. Auditing takes time, but provides assurances to the potential purchaser that the values in the statement are accurate and verifiable. Invest the time to prepare audited statements, as well as tax returns for review.

Goodwill is a term used in the sale and valuation of a business to describe unquantifiable items that have a direct impact on current and future sales. There are a host of accounting methods used to evaluate this item, but it should be supported by facts. Recurring customers, sponsorship of community events or teams, annual traditions that customers are familiar with, and general reputation are all part of goodwill.

Market trend information is available from the board of trade or the business association for your area. These reports are typically five to ten pages in length and describe changes in trends in the past two to three years, and provide a general forecast for the next three to five years. Be sure to obtain a report that is specific to your physical location or industry, as this type of information is very sector specific. These reports are usually published on an annual basis, so purchase one in advance to prepare for offering your small business for sale.

Many owners who want to maximum their return on a small business for sale will provide a management report, evaluating the factors that impacted profitability or revenues. A well-written report should include a set of action items that the new owners can implement to increase sales and profits. Providing all the information in a nice package will help potential purchasers see the current value and future potential in your firm.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Discussion Comments
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.