As a business owner you know how crucial it is to prioritize the continuous growth of your business which in turn increases its value. When potential buyers are attracted this leaves you in an ideal position if you choose to sell in the future. One way to start is by obtaining an expert and unbiased company valuation in Ontario to establish a benchmark for your business’s current worth and identify opportunities for growth. It is not enough to simply claim that your business has growth potential, having documented plans for the next 1, 3, and 5 years and showing evidence of successful implementation and results leaves you ahead of the game.
The size and scalability of your business are key factors in determining its value. A scalable business model indicates growth potential and is therefore more favorable to investors, resulting in a higher business valuation multiple applied to earnings or cash flow. Striving for growth and scalability will make your business more stable, lower risk, and consequently more valuable. Market penetration, or selling existing products to your current customers, may not seem like an innovative strategy, but it is an effective way to grow your business in Toronto and improve its valuation. By enhancing product placement and visibility, you can improve interactions with your existing customer base, fostering loyalty and increasing sales.
Your existing customer base is an excellent group to test new products with. These individuals have already demonstrated their loyalty to your brand and have benefited from your current offerings. By identifying and meeting their separate or supplemental needs, you can drive business growth and increase its value in the market. Just like running a successful business, conducting an effective business valuation requires meticulous planning and attention to detail.
It may come as a surprise, but the reasons for seeking a business valuation can affect the results you receive. While business value is measured objectively, the outcome depends on two key elements: how you measure business value and under what circumstances. In professional appraisal terminology, these elements are known as the standard of value and the premise of value.
During the execution phase, Valuation Support Partners carefully review the initial information provided and arrange a meeting with management to discuss any follow-up questions or additional information required. We conduct thorough research on the company, industry, economy, and related areas before completing our valuation analysis and drafting the report. The execution phase involves conducting additional research on the company, industry, and related areas. Then gathering additional information through follow-up meetings and interviews with management and finally conducting a valuation analysis and drafting the report.
An initial business valuation report can provide business owners with a good estimate of their company’s current worth. We use the preliminary valuation report and a five-year cash flow forecast to determine the most appropriate strategy for owners to achieve their objectives. While a preliminary valuation does come with a cost, it is important for owners to know their business’s value as they aim to receive full fair market value upon leaving their business. The valuation also helps the advisor and business owner to understand how much growth needs to occur in order to meet the financial objective at the departure date. Following a preliminary valuation, owners may discover that no growth is necessary, or alternatively, that significant growth is needed to increase business value and potentially delay the departure date. Whether owners should sell or keep their business in a competitive market is a crucial decision to make. Contact one of our professionals at Valuation Support Partners to learn more about how we can help you plan for a successful economic future.
To determine the value of a company, projections of its annual net earnings or operating cash flows are made over a period (usually 3 to 5 years), and thereafter annually (known as the terminal value). These projections are then discounted to the present date using a risk-adjusted discount rate. Any changes in assumptions underlying the projected cash flows or associated risks will impact the business operations and share value. Valuing companies with negative earnings requires a deeper understanding of the business, including its risks, strategic plan, competition, and life cycle. VSP has the expertise and resources to conduct a reasonable and supportable company valuation report for such companies. Call 905-305-8775 today to learn more.