What is a business valuation?

A business valuation is a process of determining a business’s economic value. Analysts will use factors like company leadership, the current market value of a company’s assets and future earnings to determine valuation.

It’s a good idea to perform a business valuation regularly since it can help you identify ways to improve your company. But a business valuation can also be used in exit strategy planning, when you’re preparing to sell a business or if you’re looking for funding.

When you run a small business, you wear many different hats. From bookkeeping to marketing to developing your product or service offerings, entrepreneurs and small business owners are busy. While it’s not always easy to find time to complete additional tasks, small business owners should take the time to determine their business’s value regularly.

With small businesses being sold at historic rates, it’s essential that your business is ready for a potential sale. Even if you don’t want to sell your business, knowing its worth is a good idea.

But determining your business’s worth is easier said than done. If you’re unsure how to find your business’s worth, speak with a business expert to get an accurate valuation. We spoke with experts who shared a few tips on how businesses can find their value.

What’s the benefit of knowing your business’s value?

A business’s value is incredibly important information if an owner is thinking about selling it. Trying to successfully negotiate a deal without a prior understanding of what your business is worth puts you in a position to lose money.

Many small business owners neglect to calculate their business’s value, but you can easily remedy this omission. If you’re putting countless hours into a business, speak to a business appraiser or business advisor; they can help you determine what your business is worth.

“Many business owners expect the income they make from the future sale of their business to fund their retirement,” said Justin Goodbread, owner and CEO of Financially Simple. “Yet, most do not have a formal valuation done on their company until they are ready to sell it. Many are then shocked to learn that they haven’t created enough value within their business to reach their retirement goals.”

A business valuation can help you plan your future as you prepare for retirement.

“If you wait to assess your business’s value until you want to retire or have to retire, you have no time to increase the value of your company,” Goodbread explained. “You will only get what you can get, whereas if you know your business’s value ahead of time, you can work with professional advisors to increase the value of your capital – your cash flow, your tangible assets and your intangible assets – which will then increase the value of your business.”

Get a business valuation started right away

and have time to prepare for selling or continuation.

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[Read the full article from businessnewsdaily.com here.]