Is your business ready for a valuation?

valuation

Is your business ready for a valuation?

Some people say a business is only worth what someone wants to pay for it. But to avoid being undervalued, there are several ways to assess and improve your business. Deciding how much your business is worth is crucial if you want to sell or negotiate a deal. An accurate valuation can help you:

  • Secure investment – Investors want to see realistic figures to value the deal you’re offering accurately.
  • Set fair prices for employees – In some companies, employees like to buy and sell shares in the company. Sometimes they get discounted rates.
  • Grow your business – Getting an annual business valuation helps you secure funding and focus on the areas most in need of improvement and support for continual growth.

But how can you ensure you’re ready for the valuation process?

Intangible assets

There are many measures professional business valuers use to assess your organisation. Some aspects of your business are easier to assess than others – for example, intangible assets. These might include:

  • The value of your customers
  • Whether the sale of your business is forced or voluntary
  • The strength of your staff and the team running the business
  • The age of your business. Startups might have a lot of potential whereas long-established businesses might have good staying power
  • The products and services you have 
  • Your reputation
  • Your trademarks

It’s hard to value assets like these because their worth is sometimes objective. But, there are things you can do to make sure you get a good valuation.

Preparing for a valuation

To have a better chance of securing a good valuation, you can do the following:

  • Plan ahead – If you have a great business plan, with details on how you plan to reach future long and short-term business goals, you’ll get a head start.
  • Reducing risk – Nobody likes excessive risk. Minimising it by ensuring you don’t rely on a small group of customers or suppliers and attempting to diversify will make your business seem like a better investment. 
  • Implementing great processes – The future is now and people want to buy businesses who can keep up with modern ways of working. If you haven’t digitised important aspects of your business, aren’t operating efficiently, and have no plans to improve your processes, you won’t maximise your business’s value.

These tips should help you get your business ready for valuation. But remember, each business is different and what works for someone else, might not work for you.

At Big Hand, we offer businesses expert advice on how to prepare yourself for an upcoming valuation. Our accounting team can take your financial worries off your shoulders while we help you get to work on reaching your business goals. All you need to do is call us on 0161 327 2911.

About the Author:

Since 2013, Sophie has been an integral part of the Big Hand team. As a social butterfly, Sophie is mostly responsible for introducing new clients to the company. If you’re an avid networking, you’re most likely to meet Sophie at local events. Alongside attracting new business, she also assists with account management, and she manages payroll on behalf of clients. For fun, Sophie loves to keep fit running or playing korfball with her team. She is also in the middle of learning a new language and so her most recent challenge is attempting to read Harry Potter in Dutch.