Know the Value of Your Business

  • 29th Oct'20
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What is Business Valuation?

Business Valuation is a process where the owner of a company/business calculates its market value and price. This business valuation is done in several cases like, sell off the entire business, sell off a portion of the business, or including a partner in the business. A business valuation is a general process of determining the economic value of a whole business or company unit. Business valuation can be used to determine the fair value of a business for a variety of reasons, including sale value, establishing partner ownership, taxation, and even divorce proceedings. Owners will often turn to professional business evaluators for an objective estimate of the value of the business.

Read the below link to know more about what business valuation is:

https://www.investopedia.com/terms/b/business-valuation.asp

https://corporatefinanceinstitute.com/resources/knowledge/valuation/valuation/

 

Methods of Business Valuation

A business valuation is a way to determine the economic value of a company, which could be useful in several situations. There are several methods of business valuation, such as Asset-based approaches, Earning value approaches, the Market value approaches, and based on several other aspects. Each approach has its considerations, and if you own a sole proprietorship there are further factors to consider.

To know more about the business valuation method, read:

https://www.thebalance.com/business-valuation-methods-2948478

https://smallbusiness.chron.com/calculate-valuation-company-23616.html

https://m.economictimes.com/small-biz/money/your-companys-true-worth-how-to-value-your-business/articleshow/63623275.cms

 

How To Value A Company?

 

A company is valued on different parameters. A well-settled business can be valued easily as compared to a startup. It's commonly said that business valuation is more art than science. If this is true, then the practice of valuing a startup business is squarely in the domain of the artist.

Entrepreneurs need to put a value on their startups in order to raise money, and investors need to put a value on their investments to generate liquidity.

To know exactly about the parameters of how to value a company, read:

https://www.entrepreneur.com/article/72384

https://www.thehartford.com/business-insurance/strategy/selling-a-business/determining-market-value

 

Startup Valuation Calculator

It’s always good to have some sort of idea about the worth of your start-up at any given time. If you’re at an early stage this often isn’t easy. Established businesses have assets, solid metrics, a good customer base, and (hopefully) profits. This means the worth of a company can be easily worked out. As a start-up, you might be missing some of these key factors, which makes calculating the value of your start-up a little bit harder.

The below links are about the startup valuation calculator:

https://www.caycon.com/valuation

https://www.equitynet.com/crowdfunding-tools/startup-valuation-calculator.aspx

https://www.seedrs.com/academy/startup-valuation-calculator/

 

We, at Open Growth, are constantly looking for trending start-ups in the ecosystem. If you want to know any further information about the startup ecosystem, then do let us know in the comment section below.

Contributor: Amrita Sinha

Amrita is in the field of media. She has a deep inclination towards writing and public speaking. She aims to remove the stereotypical mindset of society. She loves to read and photography is her passion.

 

Sources/References:

*Note: The content published above was made in collaboration with our members.

About the author:

Editor , OpenGrowth Content Team

The Editorial Team at OpenGrowth is working to provide you with the perfect place to know everything about startups. Feel free to connect to us.


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