I got an investor that wants to know the what of my business and the percentage of the business I will like to allow him in. How do I evaluate my business and share percentage of it to investor.
Jelilat hi. Your accountant or a business financial advisor (valuation expert) can assist you with the calculation of business worth. This involves financial aspects that you may or may not be familiar with, such as assets after debts, profitability, cash flow, income, revenue, expenses, etc. Other aspects of consideration are size, age, market, place in life cycle, risk factors, customers fidelity, and so on. A relatively less complex way is to find out the price of a similar business recently sold in your city, región or online segment (if you are in the web). Inclusive you have an easier avenue to learn the value ($) of your small business: using online biz valuation calculators, where they will give you a general referential idea on pricing. Next, regarding what percentage to share with the investor, it will depend on negotiation, which usually is based on subjective/objective factors. Keep in mind an investor could ask you for 20-40+ % of ownership. How much would you like in exchange and during what period of time? If necessary, what will be your "exit" strategy to recover the shared part with the investor? Be sure your business will have a real potential to generate the expected income. Select an investor with good reputation and elaborate a sound contract with a specialized attorney. I wish you the best.
Thank you Miguel for this well explained answer to my question. I'll work on that.
Will be glad to be connected for such reasons