What is My Business Worth?
At some point every business owner asks "What is my business worth?"
Often they have a some or even a good idea of what it is worth - and the conversation (often with themselves) will end with "whatever someone is prepared to pay".
We want to guide you through our process for a basic business valuation and some simple methods for calculating the value of your business.
DIY Business Valuation Guide
To give you a better and more informed idea of the value of your business we have documented the basic process we follow and explained some of the valuation terms and methods.
We run through:
What the value of a business really means.
Business valuation process
Key methods for calculating the value of a business.
How to interpret the outcome of the valuation.
Download the Valuation Calculation Sheet here
What Does The Value of a Business Really Mean
This depends on the basis of the business valuation:
Are you considering the business as a going concern or not?
Are you looking at just the "working assets and liabilities" of the business (enterprise value) or equity value?
Do you want to know market value or strategic value?
- What is the date at which you are calculating the value of the business
An experienced valuer knows how to answer these questions and under what circumstances they apply.
For now we will make the following assumptions:
The business is a going concern (or at least NOT insolvent or in financial distress).
We are assessing market value of the enterprise (not equity value).
The date of business valuation is at the end of the most recent set of completed financial reports.
The business has been operating for at least two years without any major disruptions to business or exceptional one-off events that may impact the valuation.
This means that if calculated correctly, the value will be the market value that any person "off the street" is likely to pay, assuming they are not under pressure to buy (and you are not under pressure to sell), they have all relevant information to make a decision and that the transaction is being done at an arm's length.
If you suspect that any of these conditions is not met, then the business value you calculate is not a "market value". In this case you need expert assistance from a business valuer.
Business valuers make adjustments for different circumstances (and even different types of businesses) but I want to keep the business valuation process simple so you can walk away from this website and have a greater awareness of what is the worth of your business.
Our Basic Self-Guided Valuation Process
Do you want to know the value of your business now?
Based on some initial assumptions (listed above) we have laid out our business valuation process in an easy to follow manual method.
You will first need to download the Valuation Calculation Sheet here
Click the button to start your own business valuation process.
If at any stage you have any questions or concerns then send us an enquiry or contact us over the phone. We are always happy to help and educate people of the value of their most important asset.
This valuation process and information is general in nature and is to be used at your own risk and discretion. We take no responsibility for any errors in calculation or judgement that you may make based on our information or advice.
We are not responsible for any commercial loss you may realise as a result of relying on the information or analysis that you complete.