Whether
you're planning to sell your business or take a loan, or to attract new
potential finances and investors, and up to date business valuation is a must
have. Simply just knowing the value of your business can help you proper manage
your business and evaluate your position.
Here are
three simple ways to determine your business' true value.
1. Focusing on Assets of a business: This is by far the simplest valuation method,
simply add up all your investments and subtract all the liabilities. You can
also do your business valuation on basis of liquidation asset-based approach.
In the liquidation asset-based approach you simply have to determine net cash
received if all your assets were to be sold.
This is one
of the best ways to evaluate the present gross value of a company or a
business. Especially useful when you are trying to sell your business or get a
business loan.
2. Focusing on Market Values: This approach focuses on determining the
value of a business by comparing it with similar businesses in the market which
were either evaluated or sold recently. This method works for most small and
medium-size businesses as there are hundreds of other businesses to compare to.
But if your business doesn't have comparable businesses in the market, then
determining the true value of your business by this method can be difficult.
Also for an
individual, using this method can be a cumbersome task. Focusing only on
current market values may under-estimate your business value. Especially if you
are just starting out or planning to expand in near future. This method is best
used by professional evaluators.
3. Focusing on Future Earning Values: This approach is by far the most popular
method for business valuation. This method revolves around the idea that true
value of any business is determined by its capacity to generate wealth in near
future. This method is very popular among investors and shareholders as they
always value future returns on their investments.
Using
companies past earnings and current growth rate, you can easily determine
future revenues of a company. Normalise the assumption for unusual expense or
revenue and add in the risk factor to get a complete learning value based
business valuation.
The best
choice: Apart from these methods, there are number of other methods to evaluate
your business. But the best way to find the true value of your business is
through a combination of all three. Combining two or more methods together will
give you the best selling price. These business valuation methods will also
plan, strategize and expand your business as well as attract more shareholders
and investors.
Never do
your business evaluation by yourself, it is like asking a mother to describe
her child. Of course, you are going to over evaluate or under evaluate your
business. That is why we recommend valuation for business must be done by a
professional. We at pnjlegal.com offer a complete business valuation services.
We,
"PNJ Legal Consultants" are one of the well known organizations
engaged in providing Consultancy Services keeping in mind the Client Service
Mentality.
We have a team
of highly qualified professionals and time to time training is provided by us
as per the requirements. Our team members deliver excellent performance in
providing these services and our clients can avail the services at affordable
prices.
Our sophisticated
team has complete knowledge of various exercises and technicalities that are
used in our services. Our services includes Strategy Consulting, GST
Consulting, Asset Management, Feasibility Study, International Arbitration, Due
Dilligence, Franchisee Consulting, Financial Audits, Operational Audits, Tax
Heaven Registrations, Shareholder Agreements, Start up Consulting, IP
Consulting, Taxation Services, Accounting system design and Mergers
Acquisitions.
Contact at
parascs@gmail.com or refer website www.pnjlegal.com
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