Be it a small florist shop or a coffee kiosk selling your business is a stressful time for you. Whether you are selling for not able to make good profits from your business or for it has becoming overwhelming to manage it or for whatever reason, you need to know what your business is worth.
By the way what is business valuation?
The process of estimating the value of a business according to the existent market situations is called business valuation.
Why should anyone value a business?
Business valuation forms an invaluable tool for the owners of a business as well as stockowners and also those who have invested in a business (as in investors).
When is business valuation used?
The valuation of business is used on a variety of occasions; as in during buy/sell deals, during possible mergers, during acquisition, during a partnership deal, in estate planning, during bankruptcy, pension plans, so on.
Why is ‘business valuation’ or to ‘value a business’ so important?
Valuing business is so important because it’s the central point of the buy-sell agreement between two business owners.
While in simple language, it tells the current market value of the organization, it is also important for an owner who is looking for a sale to ask for a fair price and it is important element for other legal situations which ask for the value of the business.
What are the various methods used for valuation of a business?
There are so many methods to value a business or an enterprise. They are categorized into:
Depending on the valuation need one can select any of the aforesaid methods of valuation.
Reasons why business valuation is conducted
Business valuation is done for various purposes; from taxation to ownership transfer to financing or insuring purposes.
What should be considered during the process of business valuation?
As you see many methods could be applied for business valuation. Sometimes, the reasons for estimating value of a business might be only to sell it. But whatever be the reason, you need to take into consideration so many factors that can affect the valuation. Here are some factors that can affect the process of valuation.
Earnings that are being made/were made by the business
Assets under the business
Kind of business
Goodwill of the business besides intangible values the business has
Book value of the stock (if any)
Current financial condition
Who will do the business valuation?
There are so many service providers who will do the business valuation for a little price. However, the cost of the valuation service depends on size and the complexity of business that needs to be evaluated. Also it depends on the cash flow of the business, its age, owner’s interference and involvement, revenue it generates, vendor finance options, profitability etc.
Business valuation services from the business brokers Sydney are rated one among the top ‘value a business’ service providers offering valuation of single owner businesses to public invested businesses. You can learn more about their business valuation services at http://www.businessbrokerssydney.net.au/business-valuation/