The one problem most business owners seem to be facing today is that of knowing their company’s right worth. This is a time consuming task which is why either small businesses don’t make the effort or expect their firm’s appointed accountant to take care of everything. But that’s not how it works. Whether it’s about selling your business, merging with a new one, working on bank loans or luring in investors, there’s a lot that goes into assessing the value of what you do. Helping you determine the market value of your business, Ed Lloyd & Associates PLLC share some advice:
Evaluate your Assets
This is as simple as it gets. Valuation of assets means appraising the value of assets in your company as the total of all fixed assets, equipment, inventory and any improvements made in the plant. This method is mostly used in industries like manufacturing and retail. Ed Lloyd & Associates PLLC experts feel this helps you understand the wealth of your business in one go.
Book Value of your Business
What does your balance sheet has to say? This is probably the simplest way to assess your business. But this is not always accurate, it’s the most commonly used method as it requires you to just go through the profits made, investments done and market assessment of your work.
Comparing your business with the other players in the market is also a good way of knowing its worth. Use industry-average sales numbers as multipliers to know the market value is a good move but make sure it doesn’t overstate or under the value of your business. For instance, many businesses do not give the real gross number their business makes. Ed Lloyd CPA suggests you use a reliable source while using this tool.
These simple methods help you understand the worth of your work, at the same time helping you take the right steps for improvements.
To know more on mergers and acquisitions, read - Mergers and Acquisitions made easy with Ed Lloyd & Associates