Top 9 Reasons to Learn the Value of Your Business

You’ve worked hard growing your business. If you’re like most business owners, you have the majority of your net worth tied to your company. Do you know the true value of your company though? You may keep outstanding records. However, without a complete business valuation, you don’t know the current market value. There are several situations where knowing the value can be beneficial.

Looking to Selling

The most common reason to use a business valuation calculator is if you are looking to sell your company. You want to make sure you have concrete evidence of your market value before committing to a sale. For many business owners, their company is their pride and joy. You certainly don’t want to undersell your hard work.

Merging Companies

You should also know your value if you are going through a merger or acquisition. Walking into a meeting with strong negotiation skills isn’t always enough. Large companies often try to underpay. If your business will be combining with another, it’s best to bring hard numbers to better your platform.

Planning Succession

Even if you are years away from retiring, retirement planning is important. Much of your retirement money will come from your company. You will need to track the value of your company accurately to project when you will have sufficient funds to retire.

Protecting Assets

You can’t predict the future, but you can help protect your assets. Having up-to-date records of your business finances will be useful in some worst-case scenarios. You could unexpectedly pass away, get divorced, be audited, or more. You, your family, and your employees will all be thankful if everything is in order.

Verifying Taxes

The value of your company affects your taxes. It’s important to verify that you are being taxed accurately. A valuation can make sure that all your business deductions are accounted for so that you don’t end up overpaying.

Purchasing Insurance

Having a valuation done is a vital part of acquiring life insurance. In the event of your passing, your insurance company will ask for a valuation. It will be used to ensure any co-owners and heirs are compensated correctly.

Seeking Investors

A valuation can help you secure investors. The report can be used as a sort of resume for your company. In addition to showing your financial value, an overview of your business’ history and legal structure will be included.

Observing Growth

Yearly evaluations will help you track your company’s growth. You will be able to clarify what business decisions had the largest impact on your growth and continue planning for the future.

Assessing Expansion

A business valuation can also help you make decisions about an expansion. You will be able to correctly assess if you are ready to expand. The value can also be used to get funding. Lenders need to see proof of acceptable collateral.

All business owners can benefit from learning the value of their company. Whether you are selling, merging, growing, or simply planning ahead, be sure you keep your biggest asset safe.

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