Whenever a business is sold, there is an attempt to measure the goodwill associated with the business and the sales price will account for the transfer of business goodwill to the new owner. A business with a great community and customer reputation is worth much more than a business with a poor reputation. As a business owner, whether you plan to sell soon or not, you should be building goodwill as a consequence of your normal operations.
The challenge has always been — how can you measure and value goodwill. It has been an exercise in speculation to assess the goodwill associated with a business; however, the Web now provides businesses with a way to remove some of the uncertainty from the process.
Every business that’s been in operation for any time at all is listed on multiple websites and many of them provide customers with the ability to provide reviews and recommendations. As a business owner, I can foster the growth of a goodwill measure for my business by encouraging my customers to leave recommendations for me on these websites. The more successful I am in getting my customers to leave great recommendations, the easier it will be for me to make the case for a large goodwill valuation during sales negotiations. Favorable reviews and recommendations, gathered over a period of years provide compelling evidence of substantial goodwill in the community. Whenever you decide to sell your business, that long-term effort to document goodwill through customer feedback will pay off at the bank.
Want to learn more about building verifiable goodwill for your business through customer recommendations and reviews? Call me at 979-531-8300 or send me an email through the Contact form today.
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- Mar 14, Business Valuation Methods: Small Business Valuation Formula (more-for-small-business.com)
- Building value in your business – what is it and how do you track it? [Alan Rae – Business R&D] (ecademy.com)
