Valuing your business is an important exercise that is necessary at many stages. What is your business worth?
Knowing how to use a business valuation calculator is an excellent way to assess.
When a Business Valuation Is Necessary
There are many reasons why a business valuation is needed, including:
The range of possible needs means you may have to complete a business valuation many times during your ownership.
How to Value a Business
There are three basic approaches to business valuation:
There are many different choices for executives who need a small business calculator for business valuation. Each takes a slightly different approach to the calculation. This calculator uses an earnings multiplier approach and includes the following inputs over three fiscal years:
Variables that Affect Business Valuation
There are different factors that can affect your business valuation. As seen in the recent post, Business Plan Calculators: The Quick Guide, many of these sites use proprietary formulas to weigh these factors.
Among the most common factors that will increase the value of your business or potential acquisition are:
Valuations can also take a closer look at your revenue to determine if they are in decline, increasing, or steady.
Risks play into the valuation of a business. Among the risk factors that may shape your valuation are:
It is important to note, that while there are many uses for a business valuation calculator, it can never be used to determine whether the “adequate consideration” requirement is met when employer securities are purchased or sold in a ROBS plan, like Benetrends’ Rainmaker Plan®. An independent appraisal (and a formal business valuation) is required to meet this standard.
Benetrends is a leader in business financing and support services. We pioneered the use of the Rollover as Business Start-Ups (ROBS) strategy, which allows you to use your existing 401(k) or IRA funds to finance a business purchase, start-up, or expansion. Benetrends also offers an array of business support services, including formal business valuation services. To learn more, download The Definitive Guide To 401(k)/ROBS Business Funding.
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Information provided by Benetrends Inc. is not intended to be used as legal or accounting advice, or as the sole basis for investment decisions, nor should it be construed as advice designed to meet the particular needs of an individual investor. Please seek the advice of legal or tax professionals, as appropriate, regarding the evaluation of any specific information, opinion, advice or other content.
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