Wednesday, February 8, 2012

Does a Small Business Really Need a Business Valuation?

As a small business owner, are you interested or concerned with the worth or value of your business? You may be able to pull together an estimate based on financial records, but there are many other elements of the business that aid in determining value found both inside and outside of your financials. Gaining knowledge and understanding of your business' true value with real-time information to successfully facilitate short-term, medium-term, and long-range planning will provide company guidance and ultimately higher business value.

Often small business owners hear the term "business valuation" and believe such a document or service is strictly for owners seeking to buy or sell a business. While this thinking has truth, obtaining a business valuation annually offers any owner a thorough picture of their company's health with the ability to identify both strengths and weaknesses. Having such information and data is priceless and offers an invaluable tool to make critical strategic decisions.

Running a business of any size requires much work, dedication, and sometimes some luck. Because most small business owners wear numerous hats in the company, it is difficult for them to see the proverbial forest from the trees, where weaknesses lie in the company's armor. As the business owner, your responsibility requires your objective decision-making abilities to make decisions understanding what is best for the health and longevity of the company. A business valuation is absolutely critical to obtain information to review, analyze, and evaluate the different aspects of your business.

Through the valuation process, a professional financial analyst reviews company financials and other tangible and intangible aspects to make a determination of the fair market value of the company. The valuation expert will help identify weaknesses in the company and offer remedies to help fix the issue as well as preventing such issues from reoccurring. Often, small over-expenditures such as high vendor costs or holding an excess of inventory can turn your business around on a positive level. The savings may seem small but over the course of the year adds up to substantial savings in this example.

A business valuation grants business owners with valuable insight to assist in decision-making and forward planning. Regardless of the size of your business, obtaining a business valuation will provide tangible and positive benefit. In the uncertain times of the economy, having such peace of mind of your business value offers a concrete level of understanding and certainty.


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    Business Appraisal