Steps to Figuring Out Exactly How Much Your Business Is Worth
Correct business valuation is important when you are planning to sell your business.
In a complex and competitive global market, where business models are changing rapidly, selling your business at the right time can make the difference between your entrepreneurial success and bankruptcy. Establishing the selling value relating to the specific conditions of your business is extremely pertinent.
Here are some methods you can use to determine the value of your business.
- Asset-based valuation
- Historical valuation based on earnings
- Valuation based on market value
- Relative evaluation
- Discounted cash flow assessment
- Income base
- Assessing the return on investment
- Valuation of the book value
- Evaluation of liquidation
- Comparable analysis value
Should you hire a professional to evaluate your business?
As the owner of your business, you will probably be able to get all the raw data you need to evaluate your own business. While this may be feasible, you should rely on your findings only for personal knowledge. If you need an business appraisal for official business deals, then you should hire a professional.
Of course, as with most business considerations, you need to weigh the cost over the benefit. Business appraisal services charge either an hourly rate or a flat fee for the project. While it may be helpful to ignore the cost and do the appraisal yourself, hiring an appraiser is worth the cost when it comes to figuring out exactly how much your business is worth and eliminating doubts.
