There are many reasons why you might want to place a value on your business. Perhaps you’re thinking about taking on a partner who will buy into the business. Before that can happen, you both need to know what the business is worth.
And you’ll certainly need a valuation or appraisal if you want to sell the business. Other reasons you might need a valuation include divorce, spin-offs, business disputes and liquidation. Or how about this: you might simply want know.
Accurately valuing a small business, however, can be complicated. Most entrepreneurs are capable of boosting the value of their businesses by 40 percent simply by paying attention to the things that make a business valuable.
Too often, business owners brush aside valuations, believing them necessary only if they decide to sell. As a result, only about one in 20 small businesses have done a formal valuation, according to the National Association of Certified Valuation Analysts.
You can determine the value of a business in many different ways, from quick and cheap software-based calculations you do yourself, to full-scale, certified valuations by professionals. The price range is enormous, from as little as $15 for the simplest software, to thousands for a detailed analysis performed by certified pros. Business brokers, hoping to sell your business, may even do them for free.
Try to match the person or method you use for a valuation with the reason you are doing it. If the valuation is for loan purposes, for example, look for someone who’s done small business valuations for that purpose.
The National Association of Certified Valuation Analysts (NACVA) offers a free service online to help you find a business valuation expert in your area. NACVA provides training, certification and support for professional valuators in cities and towns nationwide. Look for the “Find a Valuator Directory” at the Web site, http://www.nacva.com.
PriceYourBusiness.com offers simple small business valuation software you can access online 24/7. Results are quick and available anytime.
To learn more about valuing your small business, contact SCORE “Counselors to America’s Small Business.” SCORE Chicago is a nonprofit organization of more than 100 volunteer business counselors who provide free, confidential business counseling and training workshops to entrepreneurs and small business owners. You can set up an appointment at one of our 15 locations by clicking this link. Check our website www.scorechicago.org for details on our workshops or resources on topics of interest. Call 312-353-7724 for further information