Are you looking for business evaluation services to assist you with determining the current value of your business? A business valuation firm can provide your company with a variety of small business valuation tools and services. Furthermore, these business valuation services include providing you with important educational information so that you have a greater understanding as to how this process works.
It’s interesting to note that a business’ value is relative rather than absolute. Furthermore, the value is affected by the specific reasons for wanting to determine its worth.
When you’re relatively new to being in business, and haven’t sought a business valuation before, many financial terms may not be within your purview. These might include discounted future cash flow, excess earnings, as well as a variety of other terms common to the financial analysis field.
If you have been in business for approximately three-to-five years, however, and are planning to sell your business, you may also not be as familiar with business valuation methodology as you would like to be. When you work with a business valuation firm, however, they will be able to provide you with detailed explanations so that you understand the terminology, concepts, and how how they will evaluate your business.
If you’re just now preparing to contact a firm to begin your business evaluation process, you may be interested to know that there are three basic approaches to determining the value of your business:
Recent sales of similar businesses
Business’ earning power and risk assessment
Company assets
There are two key elements to determine how this is measured and under what specific circumstances. One valuation income approach is the standard of value, which refers to the type of monetary exchange, such as the United States dollar.
The second valuation income approach is the premise of value, which pertains to the circumstances surrounding the request or need for a valuation. One of these circumstances could arise from a need to liquidate.
When you obtain the services of a business evaluation firm, they will request your financial statements.The primary ones they will request are your income statement and balance sheet. In order to have your small business properly valued, you should have three-to-five years of these statements available.