I am amazed at the amount of automated business value tools available on the internet. Many business brokers have them on their websites, or other sites they own which are designed to ‘get you in’. That’s a bit harsh you might say, but that is the reality. If you, the business vendor, thinks it is as easy to just enter some basic information into some fields on your screen, then receive a “valuation” or an ‘appraisal’ of what your business is worth, then you will believe anything.
To your credit, you, like most people probably fill them in out of curiosity more than anything, but the catch is this – and you probably know what I am going to say……… You provide the company with your contact details in order to receive the valuation which is the whole point of it from the companies side of things, AND, the valuation will be stacked on the wrong side of the scale , most likely WAY higher than it should be to get you, the vendor, to eventually like what you are hearing and come on board to list with them. That’s it. That’s why they offer this “tool”. Please be smarter than that. The reality is, and yes, my job is to be realistic, that PROPER valuations and appraisals are very complicated.
They ARE NOT BASED on earnings and profits alone, but many factors and issues have to be considered in order to give the correct advice.
By way of example –
2 Cafes, identical is size, income, profitability, fitout etc. You input these details into the “tool” and you probably get the same “appraisal” right ? What this “tool” cant take into account is one cafe has a 20 year lease and the other has 2 year lease with a demolition clause which has been enacted. I can tell you now these cafes would be valued at entirely different amounts and the reality is one of them probably would never ever be able to be sold, so what is it worth……..NOTHING……. But But But – the internet broker tool, it said Id sell for $350,000…………. C’mon. These “tools” are a gimmick. Don’t waste your time with them or the “Agencies” who utilise them. They are just after your information to “turn ” you into a listing. Shop around.
