5 Reasons To Get Your Business Valued

Did you know that businesses take roughly 2-3 years to start turning a profit? The thing is, they’re actually only considered successful after doing so for 10 years!

Even after hitting that 10-year mark, many owners don’t know exactly what their business is worth, and this is absolutely essential — especially when selling. This is where getting your business valued comes into play.

Why Having Your Business Valuation Done Is Important

Aside from simply knowing how much your business is worth in the current economic conditions, here are a few other reasons why having a business valuation is essential:

1. It’ll Provide You With A Baseline

Having a regular valuation done for your business can provide a baseline of how well your business is doing at this point. Think of it like a health check-up for your business.

Itll Provide You With A Baseline 1

Doctors will run a few tests to look for signs that show how healthy your body is. When the results come back, they’ll either send you on your way with a good report or advise you on improving your health.

The same applies when you have your business valuation done by a qualified business broker.

They sift through the different facets of your business and, ultimately, give you a valuation from their findings and advise you on some aspects that may need improvement, leading us to our next point. 

2. They Offer The Opportunity To Improve Your Business

As you can imagine, having an individual look at your business with fresh eyes to determine how much it is worth is bound to shine some light on areas that need improvement.

A business broker’s primary goal is to fetch their clients the best possible price for their business.

So, upon inspecting your business, they’ll highlight areas that have affected the valuation of your business negatively, offering you the opportunity to fix these issues to boost its value. 

Remember, a valuation of your business will also consider all its non-financial components, such as its clientele, business structure, employees, and overall infrastructure. This could provide you with valuable insights into areas that need improvement. 

3. A Valuation Helps You Track Progress

Having regular valuations done can also assist your business in tracking its progress in achieving specific goals — especially if the previous valuation revealed some areas where your business needed improvement.

Say you run a logistics company, but several of your vehicles are in bad condition; this may severely impact your business valuation results.

Thus, fixing the trucks or upgrading them could improve the value of your business, which you’ll only know about the next time you have your business valuation done. 

Valuations Boost Your Chances Of Obtaining A Loan

4. Valuations Boost Your Chances Of Obtaining A Loan

For businesses to grow, they need to acquire capital to reinvest. There are two main ways to get this ball rolling.

Firstly, you can save until you have enough to proceed with your desired plans, or you would need to take out a loan.

However, when you approach a lender as a business, they will want to know what type of leverage there is in your business if they borrow funds from you.

Having a valuation on hand will be the first step to securing a business loan if you choose that route. 

5. They Promote Accountability

As said earlier, business valuations expose gaps that need to be filled in a business. Now that you know about them, you’ll be responsible if they’re left without being dealt with.

Thus, having a valuation done essentially holds you accountable for the health and state of your business.

When To Have Your Business Valuation Done

Most people would have a business valuation done when they start to look at selling their business or any of its assets.

You may also want to do a business valuation for tax purposes to check if you’re paying the right amount for tax. 

Additionally, as you can see above, a business valuation can be done at any time.

It can provide you with a benchmark to measure your progress or even offer a convenient way to find areas where your business needs improvement. 

Final Thoughts

Whether or not you plan to sell, understanding your business’s worth gives you a way to measure its success and gain some insight into where you can strategically build into your business to increase its value. 

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Jonathon Spire

Tech Blogger at Jonathon Spire

My diverse background started with my computer science degree, and later progressed to building laptops and accessories. And now, for the last 7 years, I have been a social media marketing specialist and business growth consultant.

Jonathon Spire

I blog about a range of tech topics.

For the last 7 years I have been a social media marketing specialist and business growth consultant, so I write about those the most.

Full transparency: I do review a lot of services and I try to do it as objectively as possible; I give honest feedback and only promote services I believe truly work (for which I may or may not receive a commission) – if you are a service owner and you think I have made a mistake then please let me know in the comments section.

– Jon