What is my business worth?
Estimating my business valuation : What is my business worth?
How Long Is A Piece Of String? The question I am most asked is, what is my business worth? You could argue that there isn’t a single value. There are different situations, different purposes and different circumstances. The question ” what is my business worth? ” will have multiple answers. Valuations are seen differently, even if you assess two identical businesses that produce identical results. But that doesn’t make sense, and in some ways, you’d be correct. So what is my business worth? I need quick and simple answers!
We give two scenarios, business A and business B. Both produce solid profits and growth over the past five years. They have each achieved great returns on their assets. The businesses are located in the same suburb and City. The two are run by highly experienced management or owner-managers. You conclude that their business value would be similar. Or are they? They do have similar financial statements, performance, identical management and team structures. They must be valued the same?
If company A is run by a management team with little risk tolerance than B. Or company A has only a few big clients. Also, company B’s clients are from different industries or segments, or different sizes. Does that alter the question: what is my business worth? It would do.
What if there are two buyers, buyer A and buyer B. Buyer A is looking to secure its supply chain. Or it hopes to realise economies of scale from a purchase. Buyer B on the other hand, is looking for additional retail outlets. Its direction is to defend its competitive position. Value, from a buyer’s perspective, would alter based upon many factors. The level of competition, the market opportunity, consistent earnings, or risk appetite will affect a buyer’s perception of worth. Consider also how good a fit the target is strategically, and culturally. Two very different valuations could be made.
Options In Valuing A Business
Valuing a business, is not an exact science then? This is certainly true as information outside of traditional financial data needs to be investigated. When assessing the worth of a company, knowing the likelihood of future earnings is very important.
There are different methods for business valuation, each with their own pros and cons. With all that uncertainty and differences in likely value, is it all really worth it? If you want to realise exit plans, then yes, you do need an understanding as to ” what is my business worth ? “.
Having an understanding of business worth, affects the strategies and tactics needed to change this figure. Forecasting the value to better match exit expectations is powerful. It affects exit and retirement plans, and having this understanding means that this buys time and increases options. Planning exit 2-3 years beforehand is critical.
Accountant and Advisor Valuation Considerations
Competition for your clients is increasing and other professional services companies are lurking! Lawyers are now providing similar services, for instance. Recently, 40% of Clearbooks’ customers stated that they want greater value from their accounting firms. Being proactive is also highly desired, along with more useful business advice. In providing this value, advisors spend time and create additional costs in the collation, analysis, and presentation of reports. One service is creating business valuations. But additional data and analyses mean that time demands increase. How much time would this take per client? 2, 4, 6, or 8 hours? More? APES 225 guidelines mean that you have to provide open and clear valuations. Jazoodle cuts the cost of this to less than 1 minute per client. That really makes business valuations worthwhile.
Simple, quick valuations for accountants and advisors
Delivering clear and consistent valuations is an important way of keeping clients happy and building growth in your business. Presenting a consistent view of a valuation over time is not a luxury. It is an important part of your toolkit. A simple and powerful value that gives you another way of comparing business performance. It gives clients the information it needs in order to base its planning on. It also gives a client the starting point for modelling their business and building plans for exit. Jazoodle’s valuation package, creates additional sales options. It also reduces the cost of creating these sales. This creates happy clients, happy practices and better profits.
Indicative business valuations for company directors and their advisors
Jazoodle gives quick and simple business insights. It also gives you tools to control the future. Valuations created in seconds and for a fraction of the cost and time normally needed. So when asked, ” how much is my business worth?, you just need to press Jazoodle’s button.
Now, instead of finding the question ” how much is my business worth? ” as too difficult instead you now have easy tools to be able to answer.