How to Evaluate a Business Worth

If you’re a small business owner considering selling or selling your business, a potential investor looking at your company, or an entrepreneur who wants to know how much you’re worth knowing your worth is vital. It is often said that the worth of a business is determined by what someone will pay. There are numerous methods to determine your business’s value to the market.

To determine the worth of a company it is easy to do so by adding up all of its assets. This includes tangible and intangible assets. Then, subtract the company’s liabilities that include outstanding debts and loans. This is a simple way to assess the value of your business and could be useful when you request for a loan, or invest.

Another method of calculation is to determine a company’s value by multiplying its annual earnings by a number or price-to-earnings-ratio. This is a great method to measure the worth of your company versus other businesses in your industry. However, it’s important to be aware that this can be an opinionated method to determine the value of your business.

For instance, it can be difficult to determine the value of a start-up when compared to an established company, as startups are faced with initial costs and have fewer years of financial statements. The most reliable and accurate method is to consult an experienced business broker who can give you an idea of the market and your business’s unique features.

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