Many small business owners do not know the financial worth, or value, of their business in normal economic times. As the world has endured financial hardship over the last few months due to COVID-19, many business owners face tough decisions for the future. Knowing the value of the business is a great resource to inform decisions.
What is a Business Valuation?
A business valuation uses financial data for the business, industry, and the economy to create an estimated worth of the business. A professional business valuation provides business owners an unbiased determination of the current business value.
Business owners most often seek a business valuation when they wish to sell the business. However, business valuations are used for other reasons as needed. Regardless of the reason, you receive insight into the current state of the business.
Why Knowing Your Business’s Value Matters?
Even in times of crisis where the value of your business may continue to shift, knowing the current worth gives valuable information for business leaders. Right now, we are witnessing a continuum of economic reactions to COVID-19. Some industries are benefiting while many are struggling. A valuation lets you know where you fall on the continuum.
With a business valuation, the long-term matters. In reality, some businesses will only suffer a minor and temporary struggle. Whereas other industries may face major and long-term consequences. For companies on the harsher side of the pandemic fallout, knowing the value now and estimated long-term value can inform the challenging decisions ahead.
Another factor to consider is how government aid programs can benefit your business. Based on the worth of your business, you may decide that more investment or aid would help. It’s a way to understand if you can stay strong through the crisis and emerge successfully.
Valuations Are Still Needed
While now isn’t likely the best time to try and sell a business, valuations serve other purposes. Business owners often don’t consider a valuation until they face a situation where one is required.
During economic downturns, life continues with divorces, deaths, and disputes. When these occur, business owners need to know the value of the business. In fact, you may be legally required to provide the value of your business.
Common Reasons for Business Valuation:
- Selling the business
- Financial reporting
- Marital dissolution
- Partner disputes
- Estate planning and disputes
A valuation lets you know where you are today as you plan for your future. With a business valuation, you make more informed decisions.
Alliance Business Coaching – Business Valuations
At Alliance Business Coaching, we offer unbiased business valuations to clients throughout Colorado with a focus on the Denver Metro area. Our clients receive an experienced and professional approach for an accurate and customized business appraisal.
Our business consultants and financial experts evaluate your financial records and other business-specific details to determine the worth of your business. We also offer insight into the best steps forward for your business based on our experience and knowledge.
Contact Alliance Business Coaching to schedule a consultation regarding business valuation.