One of the most overlooked criteria that every business owner should be knowledgeable of is the value of their company. We should know what impacts the enterprise value. We even encourage business owners to track it as a Key Performance Indicator on an annual basis. Imagine, calculating your business value every January and then putting in place plans throughout the year to increase the value. All too often, business owners make decisions that appear to have a positive result, like reducing taxes, but has a negative impact on the business value. The decision may still be made, but the owner should be aware of any potential negative ramifications in relation to the cycle of their business ownership.
Some owners just talk to their friends or corporate managers that tell them their business, doing a fraction of the huge corporation, is worth 4-5 times some single number. That is simply misleading and untrue. It makes the small business assume his business is worth one thing when no one would ever pay that for it. Let's be honest. When you are fully aware of the value, you can make moves to increase it's value so that when you do finally want to retire, you can maximize the sale price and the value to a new owner to build on.
A true valuation relies on many factors and can be done based on several key factors. Take employee count for example. A company making $400,000 net income with 10 trained, experienced employees is worth significantly more than a 1-person operation also making $400,000 net income. We acknowledge there are valuation apps on the internet that you enter 4-5 numbers in and get a value. The accuracy is what it is. Even our list below is based on a 1 year snapshot. We are just trying to give you a decent understanding, for free, to allow you to make company decisions.
Most valuations are based on 2-3 years. We will also do a full valuation based on 3 years of financials and an interview about your company, how you go to market, the company structure, competitive advantages, etc. You can contact us to discuss the procedure below.
All information is kept secure and confidential.
Feel free to email us at firstname.lastname@example.org
with any questions you may have.