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How do you value a small business?

Valuing a small business can be challenging or very simple. Each and every business is very different and have different valuation methods. Some of the major things to take into account when a business is valued include financial performance, in particular profitability, gross sales, the business industry, location, assets, intellectual property, real estate included, liabilities, revenue model, client list, cleanliness of financial records, existing staff, payroll, leases, inventory and ease of entry by competition.

While there are a variety of other things to consider depending on the type of small business, these are the core things to consider. Generally all of these items are taken into consideration and a multiple will be placed on owners discretionary cash flow, EBITDA, or gross sales. Generally any real estate or assets with transparent value will be added to the business value itself.

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Jacob Zimmerman, Business For Sale Exchange

Jacob Zimmerman is the founder of Business For Sale Exchange. He was introduced to the world of businesses for sale in 1995 when he worked on marketing flyers for a business broker working with a top California business brokerage. That business broker ultimately launched one of the largest specialty business brokerages in the nation and Jacob led digital and marketing strategy for the company, and spun off the largest marketplace for restaurant businesses for sale. Jacob has consulted with thousands of business brokers and business owners over the last 25 years and has assisted in marketing over 1,000 successful sales in California and marketed over 30,000 businesses for sale throughout the United States on behalf of brokers and owners.

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