How much is your business actually worth? You might have a ballpark idea, but you’d be surprised at how many business owners either seriously overestimate their company’s value, or underestimate its worth. Why is it important that you know your company’s value? It’s important if you’re thinking about selling, but there are also a number of other benefits from a professional business valuation.
Without investors, you might lack the cash flow necessary to make changes and improvements to your business. You might not be able to expand, or purchase new equipment. Investors infuse businesses with new liquidity, but they don’t like unknown risks. A professional business valuation will tell you exactly how much your business is worth, allowing you to provide potential investors with concrete numbers, ensuring that you’re able to develop the cash flow you need.
Divorce and Estate Considerations
Make no mistake, your business is an asset, and one that can seriously complicate matters in a divorce, or in the transition of your estate. With a professional business valuation, the exact value of the business is known, making it easier for the divorce to proceed, or for your estate to go through probate.
Business succession is a vital consideration. Whether you’re stepping down to let one of your children take the reins of the company or you’re just interested in playing a lesser role in the organization, succession planning is vital. An essential component of succession planning is business valuation. Without knowing the actual value of your business, succession planning is virtually impossible.
Building Greater Value
All business owners want to grow the value of their company. However, identifying key business growth strategies is impossible if you don’t have a goal – how much do you want to increase your value? You need a concrete goal here, and you can achieve that with business valuation. By knowing what your business is worth today, you’re able to develop strategies to build that wealth over time, and you also gain a yardstick by which to measure your progress.
Expanding, adding new products, buying a new building – it all requires money, and that means approaching a lender and applying for a loan. However, like investors, lenders don’t like unknown risks. Specifically, if they’re not sure exactly how much your business is worth, you’re unlikely to get a loan at all. With a business valuation, you’re able to show potential lenders exactly how much your business is worth, how much you can add to that value through your efforts funded by the loan, and increase the likelihood that you’ll be extended the loan you need.
Business valuation is important for many different reasons beyond selling your company. However, it’s just as important that you have a professional valuate your business. Make sure the company you choose has considerable experience in valuing businesses of all types, and understands the key factors in any business valuation. With the right partner, you’ll have accurate information and the ability to achieve your goals.
– Research Optimus