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Valuing Your Homebased Business

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

By Paul and Sarah Edwards

Opinions expressed by Entrepreneur contributors are their own.

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

A: If anything, thefact that you are selling such a large portion of your product onthe Internet may be a plus. Presumably your cost of sales is lessthan companies that rely on more expensive marketing tools likedirect mail and telemarketing. But the real question is not how youare making your sales, but, notes Aswath Damodaran, author ofThe Dark Side of Valuation, "Areyou really making money? If you're not profitable, everythingelse is secondary." If you're not profitable right now,your company's value will depend on how soon you can projectbeing profitable.

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