Many factors influence the value of a business. Ultimately, the potential new owner must be satisfied that the investment of time and money will be rewarded with adequate compensation for the effort expended, while providing a fair return on the down payment. In addition, sufficient cash flow must be available for the retirement of any financing used to acquire the business. Similarly, the seller must be adequately compensated for the time and money that have been invested in establishing the cash flow and assets of the business.
 

Among the factors that should be considered when valuing a business are:
 

1. TERMS OF SALE: Initial investment, terms, interest rate.
 

2. TANGIBLE ASSETS: Inventory, furniture, fixtures, equipment.
 

3. INTANGIBLE ASSETS: Time in business, customer base, training, covenant not to compete, suppliers.
 

4. LEASE: Term, options, monthly expense, location.
 

5. PROBABLE INCOME: Sales, gross profit, cash flow, quality of records, trend of business.