Whether you are considering Selling or Buying a Business, or need a Business Valuation for any purpose, it’s important to understand what influences value.  One influencer is, or could be, your inventory and Suppliers.  Listed below are a few related items to consider.

Inventory Considerations

• Do you have any obsolete items?
• How often do you “turn” your inventory?
• Do some items turn often, and others seldom?
• Do you often or seldom have to order items to satisfy an order from a customer and other aspects? 

When it comes to inventory, value is generally higher if inventory is current and not obsolete. The same goes for more frequent inventory turns as it requires less working capital. The percentage of items that turn more than average should also be considered. 

Stocking what customers order most frequently can also solidify your business relationship.  You should consider inventory averages and trends for the industry you are serving; some businesses in some industries carry more inventory than others.

Supplier Considerations

• Do you have contracts with them?
• Can the contracts be transferred?
• Is there a territory, exclusive or not?
• The number of suppliers you regularly buy from.
• The percent of purchases from each supplier, amongst other things.

Contracts with suppliers cannot only add to business value, but they also can detract from it. Assignable contracts are generally more valuable since they are transferrable.  Territories often exist but can be changed at any time by a supplier.  Major suppliers can be a plus or minus, depending on volume and cost.

So, if you are considering Selling your Business or Buying a Business, or need a Business Valuation for any purpose, please contact the professionals at Zoellner Garten & Company. There is no cost or obligation or commitment to seeking the best group to help guide your efforts.

Call (513) 852-2400 or e-mail jzoellner@zoellnergarten.com.