Knowing what your business is worth is invaluable. Before you take advantage of valuation advisory services, you’ll need to collect three basic pieces of information that are used in a small business valuation formula. First, you’ll need cash flow analysis reports. Second, you’ll need to identify your assets. Third, you’ll need a comparative analysis of the selling prices or stock values of like companies.
Business valuation advisory is beneficial for a number of reasons:
- If you’re thinking of selling your business. Valuation advisory services can help you pinpoint a fair selling price.
- As a measurement tool to help grow your business. A valuation advisory indicates your company’s current worth, which can help you set goals and find opportunities for growth.
- To be prepared for problems that may arise. Small businesses and partnerships are especially vulnerable when partnership issues or marital dissolutions occur so hiring valuation advisory firms to figure out your business value prepares you for divvying up assets.
- To attract investors. Before anyone will invest capital in your business, they’ll expect you to have had a valuation advisory to know the company’s worth and its financial outlook.
- When regulations mandate valuations. If your company is publicly traded, regulations require a periodic business valuation advisory.
- To use as a comparative tool. Hire business valuation advisory services to find out where your company stands financially compared to competitors.
- To establish an ESOP plan. In order to let your employees share ownership in your business, you’ll need to use business valuation advisory services to figure out percentages of ownership.
- To enable you to make fast decisions on buying, selling and mergers. If an opportunity presents itself to buy, sell or merge your business, you’ll need to move quickly while the offer is fresh. This isn’t the time to look for business valuation advice.
Choose valuation advisory software for help calculating business worth
With a small business, you can often take the DIY approach to finding your company's value thanks to business valuation advisory software. Before you purchase valuation advisory software, find out how detailed the reports are and what information you'll be required to input for results.
Find valuation advisory consultants to help you with the process
If you are doing a business valuation in order to sell your company, attract investors or start public trading, you'll need a very detailed valuation report. The best option is to hire one of the many valuation advisory consultants that specialize in your specific industry. Hiring valuation advisory consultants can be pricey, but well worth the investment when accuracy is key.
valuation advisory consultants is also available at Business.com.
Use online tools that provide business valuation advisory services
Another way for small businesses to save money from hiring expensive valuation advisory consultants is to take advantage of their experience by using online tools they've created.
- A valuation advisory can be a good tool to provide to a board of directors, investors or partners--especially when profits are down. Showing the value of the business may boost morale and allow you to refocus your business goals.
- You may think you don't need valuation advisory services because you know your company's worth based on your yearly tax return and financial statement. But most businesses try to expense as much as they can to reduce taxes, so the financial snapshot from these documents isn't a true picture of your business's worth.
- Decide which small business valuation formula you will use. Valuation approaches include asset, income, market comparable and other approaches.