“What’s my company worth?” Many business owners have asked this to themselves at least once. Some entrepreneurs ask out of curiosity; some want a formal valuation; others could be considering selling their companies.
For whatever reason, one can actually discover their business’ value. Below are three important steps to guide you through the business valuation process.
1. Prepare the necessary information
Business valuation requires a number of documents, including your company’s legal records and a comprehensive rundown of your finances and assets.
If you’re looking to sell your business, you also have to prepare your company’s complete profile, procedures, and plans; and complete details of your staff, suppliers, and customers.
2. Consider Getting Professional Advice
To get the best valuation of your business, consider enlisting the help of a professional. Accountants in Naples and other areas can help you analyze your finances. They can give you a rough estimate of your business’ fair market value.
A professional accountant can also help you work out your company’s goodwill value and estimate its future profit. If you’re considering selling your business, your accountant may also help you make a referral if another client has expressed interest in buying a business like yours.
3. Pick a Valuation Method
There are several ways to analyze the value of a business. With the help of an accountant, you can choose a valuation method that suits your company and industry.
The accountant can walk you through efficient techniques such as the discounted cash flow method – made famous by Warren Buffet – and the asset-based approach. You can also get some insight into the conventional way of valuing companies using specific industry’s standard rules of thumb.
Assessing the overall value of your business is essential whether you’re selling it, planning to transfer your ownership interests, or if you just want to know. Prepare the information you need, talk to a Naples accountant, and select a suitable valuation method for your business.