If you’re looking to get funding for your successful, multi-million dollar business, the first step you should take is to find out what the actual value of your business is. Potential investors aren’t going to look at your honest smile and open up their cheque books, so it’s important to be able to put your best foot forward. Whether you’re looking into securing capital, having talks to discuss a possible merger, or even selling your business, this is the most important point to start out with. The best way to cover the concept of a business valuation is to look at the more basic idea of an average, everyday person going out for dinner. You have an idea of how much it’s going to cost, but you don’t want to embarrass yourself in front of everyone by discovering that you don’t have any money!That’s why planning ahead is always important. First, you have to know what’s in your wallet. This is much the same idea as doing a business valuation. Before you go to investors and other companies, you have to know what’s in your company’s wallet. Any talks you have with any other entity will rely on what your business is worth, so you must have a valuation done.
This is something you may be able to do within your business if your company’s big enough, and you have a department that’s able to consider all of this, do the research, and get a full report back to you in detail.Realize that although doing things this way, is cheaper and keeps things “in house”, this approach is also discouraged as being unreliable. If this is something that you don’t have the personnel or the time for, then you can hire an independent company to come in and do an assessment, as well. This is also the preferred way for most investors and companies. Why would they want to do this? The answer is pretty straightforward: they need to ensure that the people who conduct the assessment are objective participants. This is done to guarantee that no one has tried to fudge the numbers to make it look like your company is worth more than it is. Some companies have been tempted to do this in the past, and some have even gone so far as to go ahead and create misleading numbers. There are, however, consequences to doing this and none of them lead to a good outcome. This may seem like it’s all about “them”, but an independent process protects you, as well.
Once you’ve found independent professionals to do an assessment of your business’ value, then you can congratulate yourself on having made the first step. This is just the beginning, though, but once you start any process the proper way, you’re more likely to end up in a good position, rather than a bad one, and that’s especially important in any business.
