Owning a business can be an exciting time but also can be very stressful. There are so many aspects involved with maintaining a successful business. Everything about running a business can certainly start to feel extremely overwhelming. It’s important to seek the necessary help you need and not put too much on your business ownership plate.
Estimating the economic value of an owner’s interest in a specific business is called business valuation. There are plenty of business valuation services available to help improve your organization and make it easier on you, the business owner.
There are two major starting points that you should begin when you are looking to determine your company’s financial worth. The first is you need to determine why you need any business valuation services in the first place, and the second is assembling all the necessary information required.
Why you would need business valuation is if you’re in need of an economic analysis exercise. The financial information that you provide to external organizations that offer business valuation services will provide key information and inputs for your company’s success.
As far as the required information you will need to provide for business evaluation: there are two main financial statement that you as a business owner will need to provide. Part of the business valuation tools necessary to complete the valuation process, your organization needs to provide the overall balance sheet and the overall income statement.
If you are the owner of a small business and you are looking to consult a business evaluation provider, you also need to provide these two pieces of financial information. Small businesses require a more extensive look into the financial information, however. For valuing a small business, you should provide at least three to five years of historic income and balance sheer statements.
There are also three basic approaches to determine the value of your business. The first is to compare all of your recent sales to that of similar businesses and all of your competitors. The second approach is to compare the business’ earnings power and assessment of the risks, and the third is based on the company’s general assets.
Business valuation is a great way to help your company stand out and for you to not worry as much about some of the organizational issues involved with running a business.
