When to Value My Business
Having a sound understanding of the value of your business in the marketplace, at all times, is a good idea and prudent for every business owner. However, to gain that level of understanding you would need to constantly review your business and test the marketplace. Continual reevaluation of your business value is simply not practical and would be distracting from the day-to-day operational needs of the business. Yet, some level of periodic evaluation is necessary to gain a fair and reasonable expectation on the value of the business.
Too often business owners never conduct any business evaluation and rely heavily on gut emotion and their perceptions of what they believe to be the value for their business. This is almost always based on their years of being in business and their close affinity for the time spent building it. This approach will only lead to holding unrealistic expectations that will hinder a business’s ability to plan for the future with a degree of confidence, as well as limit its chance of finding qualified buyers and negotiate a sale when the time comes.
There are a few specific times when obtaining a business valuation is helpful to the effective management and continued operation of a business. These key moments include:
- When you are developing a business succession plan to define your future business wishes and the methods by which a plan of action will be carried out. A business valuation provides the basis for developing the plan and assists a business owner to make critical decisions about the necessary steps required in the eventual transition of the business.
- When you want to periodically measure your business to set realistic expectations of where the business stands under the current economic conditions. A valuation allows an owner to compare changes since the business was acquired or last valued. This information provides insight to assist with strategic planning and potential option analysis.
- When you are beginning the process of selling and marketing your business. A business valuation is a necessity to develop a fair and attractive price to entice potential buyers to want to begin the purchase process and make you an offer.
There is an old business adage so often used, “timing is everything”. Timing is key, however planning and realistic expectations is paramount when it comes to managing a small or mid-sized business.
Developing a valuation estimate is a useful tool for business planning. However, seek the advice of a qualified advisor to develop the best valuation for your business.
For more information or to schedule a complimentary consultation please contact BridgeLane Advisors, at email@example.com.