“Knowledge is power” is a well-known adage. When it comes to negotiation, the power sits with those who know the true value of what is being traded. If you’re a business owner who has built their business from nothing, then that business has value to you that goes beyond anything quantifiable.
That is part of the challenge when trying to carry out your own business valuation. Blood, sweat, and tears, along with hours of sleepless nights must somehow be reflected in the business value. In this article, we’ll talk you through 5 benefits of a professional business valuation that will leave you feeling empowered and not deflated.
1. Know Your Assets
If anyone knows their business assets you would think it is the business owner. Well, that is true to some extent. However, it is more complicated than knowing what the business has listed on its asset sheet.
Each asset will be either be fully owned or part-owned if it was bought using a loan or capital lease. It’s important to clearly understand what outstanding liabilities there are for all assets. Even if you own the assets outright, it is not always clear what their present value is.
2. Powerful Income Predictions
Business valuation services will consider the earning potential of the business. This will be based on past income and the present condition of the market. A business valuation formula will take into consideration many market-based factors that will help create a reliable picture of your business health and its future prospects.
3. Real Market Value
Real market value may not be the same as the basic value of the business. This is because there are external factors that affect the value of a business. For example, is the industry booming or are other similar businesses going bankrupt?
To sell a middle market business may not be the same as selling a business that is at the top of the market. All of these factors add up to a complex equation of value. If that is calculated by professional services then it is objective and credible.
4. Opportunity Ready
As a business, you always want to be ready to take advantage of opportunities. Those may present themselves in many different forms.
If you have a current evaluation of your business then you are already well informed about your business’ capability and potential. This will put you in a strong position to assess the value of those opportunities and even reject some if necessary.
5. Raise Capital
At some point, you may want to raise capital for your business. Every business model is different but it is advantageous to raise capital and invest in your business when there is a need for expansion. Having a solid grip on the current value of your business will play a major factor in whether your bid for capital is successful or not.
Get a Business Valuation
In this article, you’ve read about the 5 benefits of a professional business valuation. The bottom line is that a professional evaluation is going to give you access to objective and credible information about your business’ worth. Getting to that figure is complex and must take into many factors that may be beyond your immediate expertise.
Get a business evaluation and clear away some of the doubt or mystery. Once you’ve got this valuable information you can use it strategically in the growth of your business.
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