1. Money

Going Concern

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A going concern is a business that is currently operating, and which shows that it intends to keep operating. That is, the business is not being run as if it were going to close soon. The concept of going concern includes:

  • A current active base of regular or occasional customers; a mailing list or customer record file would be a good way to estimate this customer base.
  • Employees who know the business and who have developed strong business relationships with customers and vendors.
  • Equipment, supplies, furniture and fixtures that are in good condition and are still being depreciated.
  • Verifiable profits over several years, as evidenced by income tax records; positive cash flow (an ability to pay business expenses), and an ability to pay off the long-term debts of the business on a regular basis.

A business which is a going concern has a high value to investors, as opposed to the value of a business that is failing or closing.

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