08.29.18
Knowing your Business’ Value

Why should you how much your business is worth?

If you were going to sell your home, you would simply contact a Real Estate Appraiser to establish its value, right? You might do this for insurance purposes, to refinance your mortgage, and certainly to establish the fair market value so that you can sell your home with the highest profitability.

Most Americans consider their home to be their largest asset. However, for many business owners, it is their business that potentially holds the highest value. Wouldn’t you like to find out? Wouldn’t you like the leverage of knowing the value of your business?

If you follow Purk and Associates you already know that we’ve shared many blogs, Facebook posts, Tweets, etc. about the importance of having your financials well organized. This is another time. Don’t go yet! Let us explain why you should look at your business’ financials and get an actual valuation of your company.

Lines of Credit:

First of all (yes, again) it is always important to know where you are financially. This holds true in your personal and business finances. If you need to buy something, you first need to know if you can afford it on your own or if you’ll have to apply for credit. Just as in your personal credit applications, you’ll need to prove your current assets vs liabilities and the ability to pay back any line of credit for your business. So arming yourself with a business valuation will allow the application for business loans to be much simpler.

Insurance:

We know, we know, it’s that nine letter word that all of us shudder when we hear, until we need it! Another benefit of having a true business valuation is to ensure that your business has enough coverage should you need to file a claim.

Selling Your Business:

Whether you are considering selling today or not, you should consider looking into your valuation. Why now? Because having a detailed look at your business will give you the ability to increase profitability before you offer your business for sale. (You might also want to make a spontaneous appearance on SharkTank and you certainly wouldn’t want to be embarrassed by Mr. Wonderful!) A potential buyer my approach you and you may approach them. Either way, they will want to know the value of your business. Your box of receipts and estimates on assets just won’t do. So get ahead of the game and allow yourself the benefit of having your business valued now so that you can spend the next year, two years, or more to get yourself and your business prepared for a maximum resale value.

Estate Planning:

Perhaps you have no interest in selling your business. Establishing your business’ valuation is also an important detail to include in your estate planning. After all, you’ve worked hard to build a successful business and you’ll likely want some say in its future.

Not sure where to start? Reach out to your CPA! They may already have the basics ready and can help you with the valuation process. Need someone experienced in business valuations? Contact Purk and Associates. We’re always here to help!

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