A business valuation is often treated as something you organise when you are preparing to sell. In reality, that can be one of the least useful times to first discover what your business may be worth. Whether you are considering selling in six months, two years, five years or have no definite exit date at all, understanding your current position gives you time to make better decisions.
That is one of the reasons we developed our business appraisal tool. It gives business owners a practical way to start understanding their business value before a sale becomes urgent. Rather than waiting until a buyer is already asking questions, you can provide information about your business now and receive an appraisal that considers the factors that can influence what a buyer may actually be prepared to pay.
Why Find Out Early?
Knowing your approximate business value today gives you a baseline. You can then ask a much more useful question: what would need to change for the business to be worth more?
Perhaps profitability needs to improve. Maybe too much revenue depends on one or two major clients. The owner may still be responsible for most important client relationships, sales or operational decisions. There could be opportunities to strengthen management, increase recurring revenue, improve systems or make the business easier for another owner to operate.
None of those things necessarily prevents a business from being sold. However, identifying them years rather than weeks before a sale gives you much more time to do something about them.
Why Not Just Use an Industry Multiple?
Applying a commonly quoted multiple to revenue or profit can provide a rough starting point, but businesses with similar financial results can still be valued very differently. Buyers consider the quality and sustainability of those earnings as well as the risks attached to acquiring them.
Our business appraisal tool is designed to look beyond a single financial figure. The information submitted is considered in the broader context of the business, including areas such as profitability, revenue quality, customer concentration, owner dependency, systems, growth potential and transferability.
That gives business owners something much more useful than simply multiplying one number by another.
Start Before You Need the Answer
You do not have to be committed to selling to start thinking about value. In fact, the earlier you understand where your business stands, the more useful that information can become.
If selling might be somewhere in your future, even if that future is still several years away, use our business appraisal tool to get an early understanding of what your business may be worth and what could influence that value over time.
To get started click here
If you want to know more feel free to reach out. Contact us for personalised assistance and expert guidance.
Regards,
Tony Arena