Got a Startup? Get a Business Valuation

Most people generally only think about having the value of their business appraised at the time of a potential sale or acquisition. As we have talked about in previous blogs, there are numerous situations in which a business owner must think about getting a business valuation, including when selling a business, for estate planning purposes, and when planning exit strategies. However, something that most people don’t realize is that startup businesses can benefit greatly from undergoing the process of a business valuation.

For a startup company, a valuation can be used as a business performance indicator, reflecting the company’s direction. It can help business owners figure out what’s working and what’s not, and where resources should directed or re-directed. A valuation can also give a deeper, more complete understanding about the competitive forces and drivers in the business’s market.

For any company, a business valuation can provide a snapshot of the business within the context of the market and industry in which it operates, in addition to evaluating the health of the market itself. This can help business owners at any level determine if the initial opportunity is still present and/or whether or not an exit from the business and the market is warranted.

It may be a wise decision for startup business owners to incorporate business valuations on a somewhat regular basis to determine if the company is achieving its desired trajectory.

By: Present Value

Tags: business appraisals, Business Valuation, estate planning, exit strategy, present value, startup business
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Adjusting Your Exit Plan

We’ve written in the past about the importance of small business owners having comprehensive exit strategies planned. You can read our post on exit strategies here. Equally important are succession strategies, which you can read about here.

Last week, The New York Times’ “You’re the Boss” blog posted an article on exit strategies. It implied that the economic hardships of 2009 may require business owners to put re-thinking their exit strategies at the top of their 2010 to-do lists. Or it may have made business owners without an exit plan understand the importance of having one in place. The post says that because the median sale price for private businesses fell between 2007 and 2008, and because once all the numbers are crunched, there is expectation that we’ll see there was a further drop in 2009, business owners with a plan to sell immediately may need to put off that transaction in order to get the most out of the businesses they worked so hard to build. You can read the post here.  

Of course, in some cases, business owners may have no choice but to sell before the marketplace improves. We discussed one such case, divorce, just last week. The most important step in planning an exit strategy is understanding the worth of your business, and it is important to work with an appraiser who understands all the intricacies involved in determining its value.

By: Present Value

Tags: exit strategy
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