Are You Getting Ready to Close One Business and Start Another?

Small business appraisal

As the owner of a home business revolving around a swimming pool, you have a specific niche.
You work with families who have sent their children to you for years. In fact, in some of the youngest families you have been able to teach the children of the children you taught years ago. Your reputation with these families is the biggest reason for your success. You have friends of current customers who are asking to get on your waiting list, even though you know that there is no possible way that you are going to find any more open time slots any time this summer.
Your training and your experience have helped you build the business that is a part of your every day life. Even in the winter when you are unable to teach in your backyard pool, you still have a willing audience. From coaching competitive swimmers in high school pools around the city to instructing small groups of parents with their young children at community centers with pools, your business keeps your schedule full. You understand that not every swimmer is training for the Olympics and not every swimmer grasps the fundamentals of the skill at the same pace. For this reason, your classes are formed around skill level, not age. By teaching both adults and children who are looking to become water safe or by helping more advanced swimmers perfect as specific stroke you have learned to train almost anyone.

For all of these reasons, you are disappointed about the big change in your plans. You are excited for your husband’s opportunity to move your family out west to takeover the family clothing business, but you have some sadness over giving up your current business endeavor. You know that the California climate will allow you to continue your business adventure eventually, but you are struggling to figure out how all of that will happen:

  • Is there a way to sell your current customer list and your current swim lesson plans?
  • Can you use the value of your home business and roll it into the value of your home?
  • How do you use the value of the family business that your husband is taking over to help you qualify for a home loan?
  • If you have to move before the family business in California is showing a profit for your husband is it still possible for you to get a small business loan to build a new swimming space in your West coast home?
  • Is the valuation income approach available to you if you are trying to place a value on your current business in the midwest?
  • When you get ready to file your taxes for the year 2017 will the small business valuation software help you calculate the possible sale of your swim business and the investment you anticipate making in your husband’s future clothing business?

Small Businesses Can Sometimes Use the Valuation Income Approach to Get a Loan or Set a Price
The fact of the matter is, most small businesses are fairly unique. In the case of a family owned business, it is often difficult to assign a value. Creating a business valuation report, however, is often necessary. Whether you decide to use the valuation income approach or the valuation market approach, in reality, most business valuation are largely an exercise in economic analysis. For this reason, the company financial information provides the most important input into the process. An income statement and the latest balance sheet are the two main financial statements you need for the business valuation, whether you take the valuation market or valuation income approach. To complete the best job of valuing a small business, owners should have three to five years of historic income statements and balance sheets available.
With as many as 21.1 million U.S. firms without employees it is not uncommon that private business owners have to find the value of their current, past, and possible businesses. Determining a selling price or an asking price can be difficult, but with a close analysis of previous financial records and comparisons to businesses that are similar in employee numbers, products offerings, or overall income, both buyers and sellers can determine accurate valuations.

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