Tuesday, May 23, 2017
Your business is your life’s work and greatest investment; what and how much it’s worth cannot be easily quantified, but as you move towards expansion, or set your sights on other, more lucrative ventures, knowing how much your business is worth through business valuation services is essential in determining the best way to profit from your venture and grow your investment.
The real answer to this question is, it depends. Determining the worth of your business is based on a number of circumstances, such as changes in market conditions, the need for business valuation, the rise of technology, doing business in the digital age, and your intended direction for the future of your investment. Here are some useful insights to guide the entire business valuation process of your investment, and exactly how that value is calculated.
The Basics of Business Valuation
There’s no one simple way to determine a business’ value and put a price tag on it, as it involves analyzing different factors, such as its market share, practice areas, reputation in the industry, the community it serves, income levels, and overall condition of the market and industry at the time of selling or expanding the business, and at which point the valuation is conducted.
For instance, if your business is a household name, it can command a value that is very different from that of newcomers to the industry, as an older business has weathered more shifts in market conditions, and over time may have accrued a more solid footing that makes it less reactive to market fluctuations that can easily topple down or discourage a newcomer. In addition to perceived stability, a business’ reputation also influences its value in a sale or expansion, as a good reputation often yields a higher net worth because customers tend to put a premium on products and services that are their lifestyle staples.
The Need for Business Valuation Services Today
When conducting a business valuation assessment, it’s important to start with why the valuation is necessary to begin with. Based on your intended purpose, there are different types of valuation your business needs, each suited to producing an assessment that will best guide the sale or expansion. For instance, the business valuation service required in expansion delves into examining your financial footing to ensure that it is stable enough to support new ventures; while a sale to settle an estate for reasons of partnership dissolution, or personal circumstances requires a valuation that supports said reasons, and calculates the ideal and most profitable outcome for the sale.
A common misconception in business valuation services is basing one company’s worth off a similar business. In reality, each business is unique, and deals with their own circumstances surrounding a sale or expansion. Even the most similar type of businesses differ in location, industry position, specializations diversified into, and revenue generated, among others – all of which can cause one business’ actual value to differ from that of another.
Accurately determining a business’ worth is also a factor of the current industry and market. If a business is geared towards taking advantage of the latest technology and innovations in their industry, this can cause its value to skyrocket beyond what was initially projected. With the rise of technological advancements and modern marketing practices in the digital age, many ventures are becoming more lucrative, and are projected to command a higher value and profitability. Alternatively, modern technology has also caused some industries to slow down, or become close to obsolete, resulting in poor market conditions for sale or expansion.
For these reasons, it is essential to work with an independent business valuation service to accurately determine your business’ worth and benefit from a fresh and unbiased third party perspective. As businesses streamline these days, rely more on technology, and new types of products and services become profitable and widely available to consumers, knowing how much your investment is worth, as well as its potential for growth, are essential in the startup phase, all the way to rebranding and adaptation to the modern market
Valuing Businesses in the Digital Age
Apart from determining a business’ viability for profiting in a sale or expansion based on its current and standing in the market, an important factor that now also guides the growth of business is how it leverages technology in the digital age. As businesses have evolved to suit modern needs of the markets they operate in and serve, technology now plays a key role in setting trends many companies subscribe to, and leverage to improve their position in their respective industries.
With the rise of the Internet and businesses nested in the digital landscape come new business models, trends and opportunities that are all changing operations, and in effect, a business’ industry position and market value. Going digital means streamlining the way your most profitable products and services are conceived, delivered, and consumed – resulting in a different valuation that reflects the current market. Whether your business is in the process of digitization, or was conceived and operate in the digital marketplace, determining its value through business valuation services is now also largely a matter of technology.
For purposes of transitioning to a digital marketplace, a business valuation service can help you accurately determine how much your company is worth, as well as project and set quantifiable targets to indicate the growth of your investment based on how modern technology is expected to streamline operations, and open more opportunities to tap into previously untapped markets.
Business valuation services aim to provide insights into how your company can respond to changing customer demographic and market trends to ensure the continued rise of your business’ worth and profitability. Likewise, valuing your company through business valuation services in time for a sale in these digital times also helps you get the best value for it, ensuring that as you move on towards more modern and lucrative ventures, you are on solid footing to fund new opportunities.
Learn how much your business is worth with independent business valuation services to guide your sale or expansion. Let’s talk about your vision and business goals when you call us at 905-305-VSPL (8775) today.
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