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Why Should You Know The Value Of Your Business?

Marcia Riner, Business Growth Strategist – November 27, 2021

To better understand your business and its potential

The goal of a business is to create a customer and to grow. As a business owner, knowing where you are is a supporting KPI (key performing indicator) of your business. Understanding the value can help you make better decisions on its growth.

When you plan to sell your business Markets go up and down. Knowing what your business is valued can help know when it may be a good time to sell. It may be worth more during a certain event or season. Waiting until you want to sell it is often too late to get the value you really want. Get your business valued now and again at important changes.

To know the value of your largest asset in order to properly plan your retirement

Your business value can have a significant effect on your retirement planning. Maximizing the value can give you the next life phase that you want. Knowing now allows you to make the changes you need with enough time to let them work.

During Buy/Sell Agreements with business partners

The value of your business is necessary to determine the current and future values for agreements and insurance financing.

In order to ensure that your business and your family are properly protected

Having the value of your business for ‘What Ifs’ is very important for protecting what you’ve created. Not just the value of the contents within but the actual business itself. Should something happen, knowing the value for a loss or for your family to recover.

When considering funding opportunities

The lender will always want to know the value of the asset (your business) that they are lending on. You don’t want to go in telling them an off-the-wall number. If you have a solid value supported by comparable information and facts to prove your value then the lender can validate your information in their decision rather than going off of the lowest possible value, therefore, increasing the amount they give you.

To plan for the future of your business with a qualified succession plan

When planning for the next person to set into the ownership you want the highest value that you will get paid on. The buyer is looking for the lowest value to pay you on. When planning for that takeover, it's best to know the value and again be able to validate why it's higher than theirs.

When you plan to buy a business

The same factors apply to the previous succession plan event. You NEED to understand the true value of the business that you are buying. Also, what negotiating points you have in your favor. Some of the key factors involve getting your investment back and projected annual income, customer value, and key employees.

To prepare for taxable events such as gifting or grants

When estate planning, the value of your business is very important for the taxability of your estate. Gifting portions of your business need to state the value of each portion. These cannot be random amounts but are supported by a proper valuation.

Any of these events can occur throughout your ownership. It’s good to have a clear view of your business's value on an ongoing basis.

Trajectory Consulting has tools to help you with your business valuation with a little as 7 pieces of information that you have readily available to you. We do not sell our valuations, we provide valuable information as support for our business clients in preparing for growth and a future exit. Because a business worth selling is also a business worth owning.

Curious about what your business is worth today and what it can be worth in the future? Give us a call, we are happy to discuss our sale-ready strategies with you. (949) 229-2112


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