Gone are the days where a business valuation was only done when contemplating a sale. The process of determining the value of your business is a good practice in a market where efficiency is key. Understanding the weaknesses and potential opportunities for your business is of tremendous value, so why wait until you want to sell your business to gain this insight?
Formal business valuation is an excellent tool for businesses that can afford the time and expense that is required. However, resources for quick, easy and cost effective estimates are also available. We are currently offering our clients access to an Online Business Valuation tool provided by ValuSource, a locally-based national company with over 25 years of experience.
Here are a few examples of how even a high-level business valuation can make your business more efficient and more profitable, long before you ever think of selling it.
- Find opportunities for improvement in your operations by comparing key financial benchmarks (e.g., sales, distributed earnings) with companies in your industry that have been sold. One of the key tools for strategic planning is benchmarking – measuring the performance of one company against another high-performing company. The challenge for businesses, especially for small businesses, is finding the data to use as a benchmark. When you obtain an estimate of value from Online Business Valuation, one of the resources involved is a database of over 30,000 businesses that have been sold, including numerous details about their operations. By comparing such performance metrics as sales, revenue, and discretionary earnings to those of companies in your industry, you can see how those metrics impact the price for which that company sold. How do the sales, discretionary earnings or other metrics of your company compare to other companies that sold in the price range you want to reach for your company?
- Find an opportunity for growth through leveraging debt (more…)