Understand The Value of Your Business
Have you ever wondered what the value of your business is? Most business owners searching on Google for “what is my business worth” find countless articles and valuation calculators. However, through each search, you are left with unanswered questions. As such, I want to provide you with enough information to seek out a business valuation or reach out with questions for more detailed advice. Peak Business Valuation, business appraiser, provides hundreds of business valuations to business owners each year. Schedule a free consultation to start understanding the value of your business.
Common Valuation Methods
Within valuation, there are three common approaches. They are the following:
- Income Approach
- Asset Approach
- Market Approach
A business appraiser such as Peak Business Valuation utilizes each approach when determining the value of a business.
Income Approach
Under this approach, a business valuation expert digs into the cash flow of the business. The ability to generate cash flow each year ultimately impacts the value of your company. As such, when you are building your business, consider the value proposition of growing your cash flow.
Asset Approach
Rarely, is the asset approach relied upon for purposes of understanding the value of your company. However, there are instances where this approach makes sense. For instance, a business appraiser uses the asset approach for asset-intensive businesses. For example, manufacturing companies or businesses with heavy research and development costs. As the approach suggests, the value of your business is derivable from understanding the value of your assets. The idea is to determine the fair market value of your assets less liabilities.
Market Approach
This approach is the most widely used and understood. When you want to know the value of your house or car, you do some quick research and find comparable cars or homes in your local area. The market-based approach is just that. This approach looks for comparable companies that are similar to your business.
Summary
Before seeking an expert’s opinion, you should understand how to value your business and why it matters.
If we can be of further assistance to you, schedule a free consultation. Peak Business Valuation helps build business environments where people thrive and reach their full potential. Let us provide you with the information you need to understand the value of your business. We welcome any questions you may have. Feel free to reach out by scheduling a free consultation.
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