Whether you are looking to sell your business or are simply curious about how much it is worth, there are certain methods you can use to determine its value. While you may already have a rough idea, it is important to use proven strategies to reveal its actual worth, and discuss this with relevant industry professionals. This in turn can reveal unexpected ways your business is making or losing profits.
When searching for how to value your business, there are certain ways you can go about it. Assets linked to the business, its profit and loss statements, and how long the business has been operational are some of the key ways for how to determine a company’s value.
At Taggart & Partners, we are the business accountants you can trust to help value your business. Give us a call on (07) 3391 1188, send an email to enquiries@taggartandpartners.com.au, or get in touch online to get started.
Tips for How to Value Your Business
Asset Valuation
One of the easiest ways to reveal the value of your business is to determine all the business’s assets and calculate their worth. These can be in the form of equipment, vehicles, and anything else that is used to achieve the business’s goals.
It is important to provide a fresh valuation of your assets, rather than relying on outdated data, as assets such as property may have risen or gone down in value over time. Intangible items such as the cost to use software like Microsoft 365 are usually excluded from these calculations.
Analyse Cash Flow
When it comes to how to determine a company’s value, a key indicator is how much money is flowing into and out of your business. By analysing your business’s historical cash flow, you can determine if the business is earning more money than it is spending, resulting in profits and a higher overall value.
This method can be taken a step further by studying your business’s projected future earnings, based on the direction your cash flow is tracking. If you are looking to sell in the future, nurturing a positive cash flow makes your business a more attractive purchase.
Compare Yourself Against Competitors
While every organisation is different, a simple way on how to value your business is to compare your company against others that operate in your industry. Knowing your business’s true value can be difficult without knowing how well your competitors are doing in the same space.
It is difficult to truly know how your competitors are tracking without seeing their books, so keep an eye out for any similar companies that have sold recently in your location. By discovering how much the business was sold for, you can gauge your own value based on how well your business is tracking against theirs.
Contact the Experts
While there are many ways for how to determine a company’s value on your own, the easiest and most convenient way is to trust the experts to handle the process for you. This ensures nothing in your books and business is overlooked, providing you with genuine value.
At Taggart & Partners, we specialise in helping small and medium businesses determine their true value. We have helped countless businesses just like yours and are on hand to help you build this value by minimising tax and maximising business growth through proven methods.
Need Help with How to Value Your Business?
Whether you are planning on selling your business or are just interested in how far its value has grown, Taggart & Partners is here to help you with all your accounting needs. We help you put business asset protection strategies in place to deliver the best chance of optimising the value of your business. Get in touch online, give us a call on (07) 3391 1188, or send an email to enquiries@taggartandpartners.com.au to learn more about our services.