Five aspects to consider when valuing a business

 
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However valuable you estimate your business to be, you have to remember that it will only be worth what somebody is willing to pay for it. This can be influenced by an accurate valuation so it is very important to ensure that you get this right. There are many business valuation methods and a good starting point is to use the online calculator that is to be found on our website. Once you have made this initial step then the most sensible thing to do is to seek more guidance from the experts who know every aspect to bear in mind. A brief summary of the key aspects that need to be considered would include the following points:

 

Financial Performance

 

What are the projected profits and cash flow and how well have costs been controlled to date? When valuing a business, it will be important to take into account any capital expenditure that has been planned for or will be needed in the future. Future profitability is obviously of the utmost importance.

 

Assets and Liabilities

 

If you add up all the assets, take away the liabilities and you are left with the asset valuation. There is a need to consider the current situation with orders and the value of any property and equipment.  What is the situation with debtors? Does the business own any patents?

 

Intangibles

 

This is sometimes one of the major considerations when valuing a business. It includes considering the strength of the customer base of a business. This can be a very valuable aspect as a sound customer base can provide opportunities for potential buyers to use them as a target audience for other goods or services. Equally important is the strength of the brand as this can dictate the potential for other spin off benefits associated with the brand.

 

People/Staff

 

When valuing a business, the current management structure is of critical importance for potential buyers, as this will determine whether or not new owners could leave the running of the business to the current management and not have to spend time being involved in the day to day management. This also includes the knowledge of what type of involvement that you, as owner, may have in the running of the business. There may be economies of scale that result in a reduction of staff.

 

Factors outside the business

 

The state of the economy at the time of selling and how similar businesses are currently valued.

There are undoubtedly other factors that a good valuation company will take into account in order to get you the most accurate valuation but this depends on the industry you operate in and the type of business you run. There are obviously many aspects of your business that need to be borne in mind and it is critical that nothing is missed when valuing a business. You will find the services of a good experienced company invaluable so when investigating the option ask for information about current deals and ensure you get the best advice to obtain this information that is critical to your business and your future.

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