Business valuation for small business is often a difficult topic. But it’s one you need to address as a small business owner.
For someone who doesn’t own a business, their most valuable asset is often their house. Imagine if you owned a house and couldn’t find out what it was worth! Suppose you got estimates ranging from $50,000 to $500,000 for your house, followed by a shrug and the estimator saying “it depends.”
A business valuation calculator
Here’s a typical business valuation calculator. It will do the math right, I suppose. But it asks for many numeric values that are hard to figure, calls for assumptions that are very broad, and then to top it off asks you to “discount for lack of marketability.” You might as well be sticking your finger in the wind.
Why you need to value your small business
Your business is a significant asset. Even if you don’t have plans to sell, you should know its approximate value. You never know what might happen to your key owners and employees, or the market. But there is another reason you need to know what your business is worth, and it’s even more compelling.
Your company valuation is a key indicator of its health
Understanding your business valuation will not only help you if you needed to sell it. It will help you grow it. Valuing your business and properly analyzing those results can be a great starting point to charting a growth path and setting goals to remedy weaknesses. Everyone will exit their business one day. Being intentional about your company’s growth will maximize the value for you or whoever is selling the business.
Valuing a business helps you develop independence
It may be a little harder to see the connection here. All too many business owners say things like “I’ve got a great business, but I can’t step away.” “It would fall apart without me.” “I can’t really take a vacation.” These are all signs that you may be distorting your own profit picture (and therefore your own estimate of business value) by not properly valuing your own time and effort in the business.
We can offer a business valuation at a fraction of the time and cost
We’ve partnered with a company that has developed a method for how to value a small business. Think of it as being like Zillow for your business. Using large sets of data from other comparable business sales, we can now provide more useful numbers and a better estimate of your business value –
- asset sale value
- enterprise value
- liquidation value
We will also take the time to walk you through custom reports and explain and interpret what your numbers mean. This information will also include a starting point for your growth roadmap – having seen the positive and negative issues in your business, we can help you move forward to improve your company’s value!
One customer for this product developed a plan to grow about 10 percent in a few years and had to revise it – because it was clear their growth would go way past that target! Finding the rough spots in your financials can help you unlock inefficiencies in your business. Contact us to get the process started – we’ve got versions of this service ranging from $500 for a simple report to less than $5,000 for a complex valuation process and a roadmap for growth.