Tip #127: 5 Reasons You Need to Know the Value of Your Business

Tip #127 Valuation GuruYou may think you know what your business is worth. You can just feel it in your gut! We don’t mean to doubt your intuition, but we’re sorry to say that this type of thinking won’t get you far. However, you’re on the right track: knowing the value of your business is very important. But estimating your business value is a task best left to a professional.

Getting a formal business valuation gives you valuable insight into your business’s worth. You’ll gain access to multiple facts and figures relating to your business’ income & asset values, as well as statistics that show how you stack up with your competition.

5 Reasons to Get a Formal Business Valuation

  1. You’ll Thank Yourself When it’s Time to Sell. If you want to sell your company, there’s no way around finding out its value. This is a situation where the further ahead you plan, the better. If you know your business’s value before you sell it, you’ll have the chance to raise its value so you can earn a higher profit when that time comes.
  2. Be Prepared to Negotiate for Mergers and Acquisitions. If an external company looks to acquire your business, you’ll have facts and figures ready to go—if you’ve had a recent business valuation. When companies look to merge, they always want to do so for as little as possible, so you’ll want to know your business’s value so you can negotiate.
  3. Your Valuation Team Will Get to the Bottom of Everything. Things like stock market value, bank account balances, and total asset value can give you a ballpark figure of what your business is worth. However, a lot of additional data is not as straightforward. A reputable valuations company will know how to find that data and assess it.
  4. You Don’t Want it to be a Guessing Game. An accurate business valuation removes significant guesswork from the equation. The valuation will provide you with concrete numbers you can use the get a useful level of insurance coverage, and you’ll know precisely how much you should be reinvesting in order to meet your goals. If you’re thinking of selling your company, it also provides insight into how much you can plan to earn after the sale.
  5. A Valuable Tool to Persuade Investors. Knowing your business value opens the possibility of seeking funding from investors. Potential investors will want to see a current business value and a growth projection based on their funding.

A good place to get started is with a no obligation valuation analysis from The Bridlebrook Group.