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Valuing Your Homebased Business

The first thing to figure out is whether you're profitable.

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This story appears in the November 2001 issue of HomeOfficeMag.com.

Q: We are at the point where we would like to sell our business. We need some advice on pricing a homebased business that does 75 to 80 percent of its sales of customized clothing for the physically challenged on the Internet. Can you advise us on where to find help with this?

A: If anything, the fact that you are selling such a large portion of your product on the Internet may be a plus. Presumably your cost of sales is less than companies that rely on more expensive marketing tools like direct mail and telemarketing. But the real question is not how you are making your sales, but, notes Aswath Damodaran, author of The Dark Side of Valuation, "Are you really making money? If you're not profitable, everything else is secondary." If you're not profitable right now, your company's value will depend on how soon you can project being profitable.

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