How Much is Your Business Worth?

Determining your business’s value is an important element of business ownership – whether you’re preparing to sell or not. Having a working knowledge of your business’s value allows you to make informed decisions and to move ahead in your business dealings with greater confidence. Because the real estate a business is located upon is often one of its largest assets, some business owners wonder how the property’s value impacts their business value, and if a separate business valuation and real estate appraisal are needed. While there is no one-size-fits-all best way to determine a business’s value, the surest path forward is to work in close tandem with a reputable business valuation company.

The Primary Components of Your Business Valuation

There are several important methods for valuing a business, and the one that’s best suited to your business depends upon the type of business you run – along with a wide variety of other variables. There are, however, some primary components that play significant roles in most business valuations, including:

• Your Business’s Tangible Assets – Tangible assets are those things of value that are part of your business, and they tend to include your inventory, machinery, and property. Tangible assets are straightforward assets, and their value isn’t usually difficult to calculate.
• Your Business’s Intangible Assets – Intangible assets refers to assets that you can’t hold in your hand or see but that, nevertheless, can add significant value. These include assets like brand recognition, trademarks and patents, customer base, and more. Recognizing your company’s intangible assets is well advised.
• Your Business’s Financial Metrics – Your company’s financial metrics refers to things like its annual profits, the amount of revenue it generates, and other values calculated on your financial statements. Having an up-close and personal relationship with those financial statements is the best way to remain fluent in your business’s value on a day-to-day basis.
• Liabilities – Your liabilities, like your tangible assets, are fairly easy to assess. They amount to those debts your business owes and those payments your business makes.

The business valuation you obtain will very likely incorporate all of these elements in one capacity or another. Having a working facility with each allows you to make better-informed business decisions – both on a daily basis and in the broader scheme of things.

Business Valuation vs. Real Estate Appraisal: Which Do You Need?

Not all business valuations require a real estate appraisal. For example, a business that rents space in a shared building likely does not have any real estate to appraise. But for businesses where the underlying property is a major component of the operations, such as a marina or a cemetery, the property value can play a very significant role in the business valuation. In these situations, a stand-alone commercial real estate appraisal is often recommended.

The Value of Knowing Your Business’s Value

If you’re preparing to sell or want to be prepared to do so if the opportunity arises, you’ll need a credible and detailed business valuation. If you own the property where your business is located, a real estate appraisal may be wise too – along with a professional appraisal review if necessary. Even if you’re not interested in selling, maintaining a frequently updated business valuation can act as a kind of yardstick to base important business decisions upon, such as purchasing new equipment or taking on investors.

An Allstate Commercial Real Estate Appraisal Can Improve Your Business Valuation

If part of advancing your business is knowing its real estate value, then Allstate Appraisal can help. Business valuations that are paired with a comprehensive real estate appraisal can help build a more complete picture of your company’s value. With an updated business valuation in your arsenal, you can make decisions related to employees, investments, inventory, equipment, and upgrades with the confidence necessary to take those calculated risks and continue moving forward. To learn more, please don’t hesitate to contact us today.