Running Head: Marketability d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d 1
Marketability
Marketability d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d 2
The term marketability is the capability of a component to be exchanged effectively in the market
setting at a fair price. In the business context, it is essential for organizations to focus on the
marketability of the products or services so that they can be sold and the business can generate
cash easily. A broad range of factors may come into play that can affect marketability, such as
business valuation, time and resources, etc. Seven key factors that impact marketability have
been identified and explained.
• Business valuation – It fundamentally sheds light on the economic value of a business
entity. A favorable valuation installs confidence in buyers of the business and hence
positively impacts its marketability. As business valuation focuses on diverse components
like total value, stability, resource utilization ability, etc., it impacts how it is perceived by
its stakeholders as well as its marketability (Miciuła et al., 2020).
• Time and Resources - The resources that are available to a business entity play an
instrumental role in influencing its marketability. The availability of skilled human
factors, technical capabilities and financial resources can enable a business to strengthen
its ability to perform and achieve higher profitability. Similarly, time is a critical factor
that can impact how well a business operates during a specific moment and the
competitive edge that it has over its rivals.
• Revenue level – The revenue of a business acts as its lifeblood that impacts its ability to
sustain and survive in the market setting. The ability to generate high revenue shows that
a business is well-established and offers value to its target audience, which positively
impacts its marketability.
• Management – The role of the management of a firm is vital to steer a business towards
the intended strategic path. The ability of the management and top executive to
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demonstrate leadership and vision can help to align business goals with the expectations
of the target audience, thereby creating value at a comprehensive level and strengthening
its marketability.
• Business risks – Business risks can act as major bottlenecks that can adversely affect a
business’ ability to function in the market setting. The ability to manage business risks
and adapt to the evolving market setting can improve the marketability of a closely held
business. The exposure to a high degree of risk on the market can adversely impact its
marketability. The risks can directly influence the marketability and future of a business
(Dvorský et al., 2020).
• Dividend-paying ability and history – Dividends have to be paid to shareholders of a
business. The ability to pay the dividend in a consistent manner can positively impact the
marketability of a closely held business as it can show that it is able to showcase stable
financial performance. On the other hand, the irregular dividend-paying ability can
diminish its marketability as it may be indicative of its unstable financial performance.
• Financial condition - Financial condition is a key factor that can impact the
marketability of a business (Discount for lack of marketability – IRS). It shows that a
business has a healthy financial performance which may be related to its solid sales
turnover. It shows buyers prefer its offerings, and thus, its marketability is favorable.
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Reference
Discount for lack of marketability - IRS (2009). Available at: https://www.irs.gov/pub/irs-
utl/dlom.pdf (Accessed: March 23, 2023).
Dvorský, J., Ključnikov, A., & Polách, J. (2020). Business risks and their impact on business
future concerning the entrepreneur's experience with business bankruptcy: Case of Czech
Republic. Problems and Perspectives in Management.
Miciuła, I., Kadłubek, M., & Stępień, P. (2020). Modern methods of Business Valuation—case
study and new concepts. Sustainability, 12(7), 2699.
