Among the most common exit strategies for small business owners is to sell the enterprise. The sale, of course, gets its most value through getting the highest possible price for the transaction. A business valuation firm, like Integgra Advisory Services, is able to provide a clear estimate of how much a particular business is worth. Upon learning of the value of the business, it may be wise to boost the valuation by increasing the revenue potential. Gym owners who might choose to sell their studios do need to take steps to up membership in order to enhance the valuation.
Playing Off the Income Approach
The "income approach" is one of the ways business valuation is performed. As the name indicates, estimates and assessments based on this approach try to indicate how much money someone would make through making a purchase. For a gym owner, clear examples of solid revenue streams would definitely aid in increasing the valuation. This, in turn, could significant assist in getting a much better sales price.
Understanding What is Helpful to Valuation
A decent-sized gym may make any equally decent-sized monthly income through general dues paying membership. The owner, however, could be earning top dollar through personal training sessions. While this definitely helps the bank account of the owner, the personal training sessions won't contribute much to the valuation of the gym. Simply stated, the revenues from the owner's personal training clientele do not transfer to the new owners. Therefore, boosting the valuation of the gym means focusing on things capable of increasing revenue such as:
- Increasing the Gym's Membership
Setting up two night time classes of one-hour each for general members at 6 pm and 7 pm might draw in new members who need a little help and guidance with working. Some may become members solely to take such classes. Regardless of why or how they sign up, their names on the membership roster increase revenue which, in turn, increases valuation.
- Offering More Things for Sale
Supplements, protein powders, t-shirts, and more can be sold to very eager in-house customers. Putting additional emphasis on this segment of revenue generation should help with valuation.
One of the great benefits of discussing the matter with an expert from a business valuation firm is the meeting can lead to taking proactive value-increasing steps. Through a careful evaluation of potential cash flow sources, the expert could advise on ways to boost income and overall value.Share