Latest Business News
The latest news on buying and selling your business
What Is Working Capital, and Why Should You Care? When selling or buying a business in the U.S., one financial term often causes confusion and frustration: working capital adjustment. It sounds technical, but it’s actually a very practical concept—especially when you're about to exchange hundreds of thousands (or even millions) of dollars. So, what is working capital? In simple terms, it's the money a business needs to keep operating every day. That includes paying bills, buying inventory, and handling short-term expenses. Here’s a basic formula: Working Capital = Current Assets – Current Liabilities Let’s use a real-world example. Imagine you own a small bakery: You have $50,000 in cash, $20,000 in flour, sugar, and inventory, and $15,000 customers owe you. That’s $85,000 in current assets. On the other hand, you owe $25,000 to suppliers and $10,000 in employee wages. That’s $35,000 in liabilities. So, your working capital is $85,000 - $35,000 = $50,000. This $50,000 is the fuel that keeps your business running. And when you sell the bakery, the buyer expects that same fuel to be included—unless you agree otherwise.
Why Valuation Has Changed After COVID COVID-19 flipped the business world upside down. Restaurants went digital, service providers moved remote, and retailers raced to build online storefronts. For business owners looking to sell or buyers hoping to invest, this new reality means one thing: traditional valuation methods aren’t enough anymore. The post-COVID business landscape requires smarter, more adaptive strategies. Valuing a business today isn’t just about historical earnings—it’s about resilience, digital transformation, and future-proofing. Let’s break it all down.
Key Takeaways Business brokers guide business sales from start to finish, focusing on confidentiality, proper valuation, and strategic matchmaking. They assist business buyers and business sellers with pricing, marketing, and negotiation—tailored to the business world, not just physical property. Unlike real estate agents, business brokers specialize in business operations, financials, and potential—not buildings and land. A proper business valuation can significantly increase the success of a sale. Partnering with First Choice Business Brokers Phoenix Northwest ensures professional support and trusted results for buyers and sellers alike.
Discover the top 10 mistakes owners make when selling their business and how to avoid them for a smooth, profitable exit.
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