Why is benchmarking relevant to business valuations?

Well, if you are buying a business and you have a choice between two businesses, one is making 10% net profit, the other 5% and the avearage business in the particular business category is making 9%, which one would you buy?

Well you may buy the one making a lower profit % if you have business experience and you know that the owner has no idea how to run a business. If they do know how to run it and they are under the benchmark average then you would buy the one making 10 %.

The benchmark for a business is a great guide as to what you should be aiming for.

  The valuation will be a direct multiple of the proft margin being achieved.  More profit = greater value.

Talk to us now.  give us a call on 9832 0900 and book you free no-obligation consultation to see what can be done to enhance the value of your business as well as the range of great concessional tax breaks available when you eventually sell your business.