Every day we hear people complaining about not knowing how to plan their growth and expansion strategies, or how to know what would be the status of their business when they retire. But when these people are advised to get a business valuation done, the simple answer is, “I don’t want to sell my business, then what is the need for valuation”. This is a wrong misconception people have in mind that the business needs to be evaluated only at the time of sale.
However, it is shown that a good businessman knows the value of his business every day so that he can make prudent decisions. Below is the list of reasons that would make you think about getting your business valued:
1. Planning for growth and expansion
A business valuation report delivers a scientifically calculated summary of your business. It includes all major aspects and is the best way to compare annual growth. By careful analysis of the valuation report, businessmen can assess their negative aspects. They can find the cause for unstable cash flows, poor systems, a high degree of dependence on key staff, and many more things which have a negative impact on the business. These areas for improvement can be then taken as a basis while planning for growth and expansion of the business.
2. Sale of business
A business valuation provides you with the market value of your business and is also a clear indicator of the performance of your business in multiple areas. Knowing the right value of your business helps to plan well. The businessmen can focus on increasing their EBIT so that when they plan to finally sell off their business, they have reached the desired amount of EBIT. This would help them get the right sales consideration.
3. Attracting investment
Opportunities for investment, private equity injection, or strategic partnerships do not arise every day. When these opportunities knock your doorstep, It is important to make a quick yet sound decision. This is only possible when the businessmen know the value of their business. With this knowledge, they can take full advantage of every opportunity. A business valuation report covers every major aspect of your business ranging from business’ history to legal and financial information. This report serves as a biodata of your business for the potential investors. Thus, it is important to invest time and money for getting an annual valuation done for your business.
4. Planning for expansion strategies
A correct business valuation report acts as a benchmark and is a critical tool while approaching investors. Any business planning for expansion must know its correct value. Regular business valuation helps you to take the right decisions for the business. If you want to make sound and prudent decisions for your business which would ultimately help in increasing revenue and profits, then you must take help of an accurate business valuation report.
5. Retirement planning
Every person spends every minute of their working age, working hard to get a safe and secure retirement living. If you are one such business person who has not only invested their time but also all the money and savings in the business and expect the sale value to help you spend the retirement, then business valuation is a critical job for you. with the business evaluation report, you can analyze for yourself what is the difference between the sale price you expect for a happy retired life and what is the present value. This analysis will help you to frame the policies accordingly.
7. Securing the future
Personal losses and future of relationships can never be predicted well. No matter how well you try to manage your life, uncertainties are bound to happen. So it is important to plan your finances and secure your assets accordingly. By conducting a regular evaluation of your business, you can ensure that your finances are in order and if someday something happens to you, your family will be able to manage themselves on that business or if someday you need to divide your estate, you should know how many shares you deserve from your business. All this won’t be possible if you haven’t valued your business accurately.
8. Insurance cover
When taking out a buy/sell life insurance agreement, business partners purchase life insurance policies on the lives of each co-owner. In the event of a co-owner’s death, the other co-owners are paid a lump sum benefit, which is then paid to the deceased’s surviving family members. For this agreement to take place, insurance companies ask for the business valuation reports. On the basis of the share in business and profits, insurance cover is provided. Hence, an up to date report is a must for every business.
The value of business fluctuates as per market conditions. Like a regular health checkup, it is important to get a regular valuation of business to know the condition and soundness of the business. The valuation process takes as less as three weeks time and gives you a prudent report of your business’s financial and market position.
By choosing MaxMargin Accountants as your valuation partner, businessmen can know not only the real worth of their business but also understand various aspects like the strengths and weaknesses, opportunities and growth factors. The experienced team helps business owners to implement simple and effective strategies that focus on increasing the value.
To get your business valued, all you need to do is book an appointment with us by calling us on 1300 886 518
Our Professional Team of Accountants is here to help you with all your business problems.
Source: Consolid8
