It is extremely valuable to know what your business is worth, and not just if you’re planning to sell. You can use an accurate business appraisal to track finances, obtain a loan or win your fair share of the company. You should know what your business is worth to protect your stake in it, and improve the company’s success. Here are several ways to determine your business’s value.
Eye It Up
You can start by determining what you think your business is worth. This is not the most accurate way to measure, but it is the best place to start. This can also give you an indication as to how accurate your opinion is. Try to be as impartial as possible in your personal valuation, and don’t let nostalgia cloud your judgement. Check out your balance sheets, inventory management and revenue. Then consider the industry and other market trends. Next, think about all factors that can’t be reflected in finances, like reputation, location and growth potential. Assigning a dollar amount to these factors can help you determine what your business is worth.
After you think about your income, factor in potential risks to your business. Is the market declining? Is there an industry giant? Does your building have faulty plumbing? All of these factors are considered threats to your business. Even if your business is earning a steady profit, potentially expensive projects will greatly detract from its value. No one wants a business that they have to pour an enormous amount of money into maintenance right away. Knowing your business’s weaknesses will allow you to better determine its genuine worth.
Just like threats to your business often can’t be measured with tangible assets, the potential for growth doesn’t have an assigned dollar sign. Examining how viable growth is for your business can supplement its overall value. Have sales been increasing lately? Is there a newfound or growing need for your service or product? All these factors influence how much your business is worth. A high growth potential can lead to a higher worth. As a business owner, it’s important to look ahead into the business’s possible future success.
Use An Online Tool
When trying to decide what your business is worth, look up business appraisal calculators. There are several online tools that can help give you an accurate representation of your physical and intangible assets. All you have to do is enter your revenue, total earnings and industry. Some calculators go back several years to get a stronger estimate. These online tools can be helpful for business owners who aren’t confident in their own judgement. However, they do not guarantee a fully accurate appraisal. They typically do not consider risk factors or potential for growth. But if you want to eliminate some of the guess work, a free computer formula can help you calculate your business worth.
Get An Appraisal
It’s a good idea to turn to the professionals with a job as important as this. Evaluating what your business is worth can be tricky. Appraisals do cost money, but they are often worth the price for a money investment. They can range from $3,000 to over $20,000, depending on how comprehensive you want the study to be. An accurate business appraisal can actually save you money in the long run. Call a professional and explain your need for an appraisal. They can help guide you through the process, analyze and compile the completely unbiased results. A professional business appraisal is the most accurate way to determine what your business is worth.
If you’ve ever asked yourself “what is my business worth?”, this is a great place to start. To evaluate your business, start by examining your physical property. You should then consider other factors that influence how profitable your business is, like any risk prospects and growth capability. Online resources, like valuation calculators, can be a useful way to supplement your own evaluation. Ultimately, the best way to determine what your business is worth is to obtain an appraisal from a professional.