What is my business worth? Whether you own a start-up business or a seasoned enterprise, your business must be evaluated to determine its business value today as represented by its future economic benefits. 

 

What is a Business Valuation?

A valuation is simply an estimate of what a company is worth based its hypothetical sale. It may also be called an appraisal and has some similarities with real estate appraisals. A big difference is that much of any company’s value is in the form of intangible assets, or goodwill. Valuing intangible assets involves a process of using various accepted valuation approaches and methods. The goal is to determine a value that can be explained and justified to others.

 

How Much is a Business Worth?

In theory a company is worth the present value of all the future benefits of owning the company. Rather than thoroughly boring and irritating any remaining article readers with confusing verbiage, the value of a company basically comes down to the classic investment paradox – risk vs. return.

 

Basic Valuation Methods

There are 3 primary approaches to valuing a company – market, income and asset. The market approach is the preferred business valuation method, using data from actual sales of similar companies or from publicly traded companies to value a business. 

 

The income approach looks at the earnings or cash flow of a business as the primary driver of its value. It is the most commonly used business valuation method and works well unless a company has little or no earnings. 

 

The asset approach attempts to value each asset of the company separately, concluding with a valuation comprised of the sum of the parts is the value of the company. This method works well with tangible assets, but not for the intangible ones. The methods of identifying and valuing individual intangible assets are highly theoretical and often produce unrealistic results. 

For experienced, reliable and devoted expert business brokerage services throughout the United States, turn to Bottom Line Management, Inc, found online at https://www.botline.com and by phone at 470-990-0160.  For over 30 years the Bottom Line Management business brokers have supplied their expert business brokerage skills to assist people throughout the USA to sell or buy their businesses. 

 

Conclusion

The reality we all have become extremely aware of in our pandemic world fraught with daily signs of a recession is the real truth regarding the immense importance of every business owner knowing what their business is worth in the market today, and what it will be worth in the future. Armed with knowledge, you can forge ahead.

 

For more information about business valuations and find out today what your company is worth contact Bottom Line Management at https://www.botline.com and by phone at 470-990-0160.