Do you know the value of your business? This can be a difficult question to answer, especially when trying to pin it down to an exact number. Since businesses are always changing and the landscape in which they operate is too, it can feel like a floating number. There are a few ways to help determine an actual value for your business.
Depending on what type of business you have or what stage the business is in – value is measured in different ways. Start-ups are often measured in the amount of funds they can raise – or their potential value. Meanwhile, more established companies are weighed heavily on their revenue stream, shareholder value and their number of users. Financial documents can help to answer these questions, but the age of the company, sales volume and other factors can also weigh heavily on the final number.
A future sales forecast, any investment opportunities, and owned property and equipment will all pay into a valuation decision. All areas of a company will be considered, like the effectiveness of the marketing department and the knowledge and capability of employees. All of these facets of a company go into its value and worth as determined in the final contract.
This is why it isn’t unusual to not be aware of off the top of your head, how much your business is worth. There are many factors that are considered before getting to a final number. It’s best not to guess at this, if you are serious about a company merger or acquisition, there is a way to get that number pinned down more accurately. You may be undervaluing your business without a correct assessment, so it’s definitely important not to sell the business short.
Source: FindLaw, “Questions to Ask Before the Valuation Process,” Accessed January 29, 2018