Back to Basics: What You Need to Know About Business Valuation

Jun 08 2016

business valuationDetermining the value of your business is important, and for more reasons than you may think. Not only can it help you determine where you stand as a business owner, it can help you project goals for the future, as well as correct mistakes from the past. The two key components in establishing a business’s worth are determining why business valuation services are needed, and assembling the necessary information. That said, here’s what you should know about determining the value of your business.

Why should a business owner perform a valuation?
Some valuations, often called “have-to valuations,” must be done as a direct result of an event, such as the death of a shareholder, a charitable contribution, or the allocation of assets. These business valuation reports must be filed to document the market value that was either gained or lost as a result of the event. However, other valuations are used to make important decisions about the future of a business. Of the 26.5 million businesses in the U.S., every single one has probably needed a valuation done at some point or another. With 99% of those businesses having less than 500 employees, valuations are all the more important. It allows owners to decide whether or not to expand, as well as make other financial decisions for the advancement of a company.

Is there a specific time frame in which valuations should be performed?
Business valuation tools can be used at any time, but in “have-to valuation” cases, the valuation must be completed within a certain amount of time. The length of the time frame varies based on the event, but the fact remains the same. Other business valuations don’t have a specific time frame, and can be done at any time. Despite the lack of official requirement for valuations, it’s important for business owners to know the value of their business at all times.

Why are business valuation firms important?
Business valuations are becoming increasingly important in today’s market for a variety of reasons — especially in fields such as corporate accounting, which works to improve financial reporting. So far, the industry has relied on scattered sources for valuation, but new technology will allow a more standardized and streamlined process. The firms that provide these services can help business owners make decisions for their personal future and the future of their business.

Performing a valuation on your business is always a good idea, especially if you’re starting to think about estate planning or simply looking for ways to increase your business’s worth.




Four Reasons You Need to Perform Annual Business Valuations

Jun 06 2016

business appraisal valuation

Starting a small business can be tough, and even tougher if you don’t know where you stand financially. Of the 26.5 million businesses in the United States, the majority use business appraisal valuations to determine the value of their business. In a constantly changing economy, keeping track of your business’s value is more important than ever. Not sure when to perform a business valuation? Here are four situations where business valuation tools will be useful to you.

You’re just starting up
One of the most important things to keep in mind when starting a business, especially a small business, is who will want to invest in your company. Nearly 543,000 businesses get started each month, but even more than that shut down. Business appraisal valuations can help project future financial status and convince investors to stick with you in your venture. Not only that, but it can help you determine how much your business may be worth in a year’s time.

You need to provide quarterly or annual reports
Odds are that investors are going to want to stay in the loop when it comes to the value of your business. Business appraisal services can provide you with quarterly or annual reports to include in presentations for investors and stockholders in your company. This can provide a sense of pride for you, and a sense of security for the people who are backing you financially.

You want to start fundraising
In order to begin fundraising for your business, you need to know the value of your company. If you can’t tell potential donors how much your business is worth from the beginning of your fundraising campaign, then you may not have many donors. Similarly, if you’re applying for a loan from the bank, it’s essential to have a business appraisal valuation in hand. Banks will often require you to use your business as collateral for a loan, and if it’s not valued at a certain amount, then you’re out of luck.

You’re selling the business
Determining your business’s fair market value is essential when you’re trying to sell. Assessing your business and investing in a business valuation report could mean the difference between selling your company and failing. Not only that, but business valuation will help you determine the key areas of value in your business and alert you to offers that are either too high or too low.

Determining why you need business valuation is often the most difficult part, but it is one of the key points in establishing what your business is worth. Don’t let your business sputter. Take the necessary steps to assess your situation!

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Tampa, FL 33606