How much is my business worth?

Are you wondering what your business is worth? You might have an idea – or be completely in the dark about your business’s value. Getting an accurate business valuation can be very useful and may cost less than you think.

Are you looking to sell your business? Merge? Take on a new business partner or buy out a partner? Perhaps you’re planning additional investment, or simply curious about the real-world value of your business? Whatever the reason, knowing the true value of your business can be very helpful as it gives you a clear picture of where you are on your business journey – and where all your hard work has got you.

Often business owners want to get an accurate valuation of their business for longer term planning. This might include succession planning in a family business, or looking towards retirement or estate planning.

So, how much is my business worth?

To get an accurate valuation of your business it is important to engage a business valuation expert. There are no shortcuts to this critical insight.

Why not use an online business valuation calculator?

You can get a business valuation from a generic calculator on a website. These are often free or cost from as little as £50. Most are very simple, just requiring you to input your number of years’ trading, net profit and balance sheet information. In reality, these online business value calculators can not be relied upon to provide an accurate valuation. The process of valuing a business is far more complex and requires consideration of a wide range of factors that are specific to your business. In addition, there is an important human contribution in valuing a business because ultimately it’s a human that will or will not purchase it.

Business valuation experts

A business valuation expert is a specialist and has real world knowledge of valuing businesses and sale prices. The valuer will take a broad range of factors into account that could influence the value of your .

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The business valuation process

Step one:

Get in touch with your chosen business valuation expert for an initial consultation. They will establish the reason for you needing a business valuation and what you want to achieve. They’ll get an overview of your business and what your current situation is.

A reputable business valuation expert will then provide a written fixed price quote for your business valuation.

Step two:

The next step is to provide the business valuation expert with key information. Typically, this will include the last three years’ accounts, perhaps photographs of the premises or the business’ operations, an inventory of assets and stock, details of your lease (if applicable), or details of your freehold premises.

Information that is specific to your business will also be discussed, such as unique factors that could impact comparisons with other similar businesses, or the role of the current owner in the business operations.

Step three:

Once the business valuation expert has all this information, they will carry out a detailed analysis of the relevant factors to arrive at an accurate valuation figure, which will be provided to you in writing.

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There are many factors affecting the value of your business. A business valuation expert will take in to account a broad range of information when completing a valuation.

Key Factors Include:

Revenue and profitability

Naturally one of the key business valuation factors is profitability. Of course, the more profitable a business, the more valuable it is. However, there are other factors to consider, for example, the consistency and pattern of turnover and profit, the predictability of revenue and the extent to which it is seasonal.

Assets and liabilities

Company assets such as capital equipment, property, trademarks or other intellectual property contribute to a company’s value. Some are not always accurately reflected on the balance sheet which could impact on the business value so it is important that you seek expert advice for your business valuation.

Market conditions

Market conditions affect the value of your business – not just the market you operate in, but the market appetite for buying a business like yours. There are definite trends in business saleability just as there are in consumer markets. When a business valuation expert analyses your business, they take in to account all market factors, including competition and trends.

Client base & reputation

The number of clients, their spending patterns and average client lifetime value are important. These tie in with your business’ reputation and standing within the market you serve, which ultimately has a bearing on value.

Location & premises

This is especially important for retail businesses, salons and cafés where the location can have a significant influence on the business’ value.

Other factors

Factors such as a forthcoming local development or changes to transport links could affect business values. These are thoroughly researched by a business valuation expert.

The staff and management team have a bearing on a company’s value, as does the owner’s involvement in the business – this can vary from the business owner being critical to the operation of the business to having very little involvement with the day-to-day operations.

An often-overlooked factor in a business valuation is buyer appetite, i.e. how many potential buyers there are for your type of business. This can be assessed by considering what other similar businesses have recently sold for. A business valuation expert will have up-to-date knowledge of comparable business sales to draw upon.

Mybusinessworth.co.uk specialises in valuing privately-owned businesses of all types. Our service is quick and convenient. It’s now easier and more affordable than ever to answer the question: How much is my business worth?

Useful Business Valuation Info