Business Valuation

Topics: Real estate, Marketing, Business valuation Pages: 2 (763 words) Published: December 9, 2012
Business valuations are an important issue that is always overlooked by many people. Most people are focused on making profit, and other things take the least priority. People will rather buy business magazines about making money and improving sales. They are interested in business opportunities and ventures. Making profit is important, but how secure are you with the future? A business valuation shows you what the future looks like. The approach to business valuations depends on your type of organization. Regardless of the approach you use, there are basic elements that are easily identifiable in any business valuation. These elements are linked to the short term and long-term profitability. The right time to make a business valuation is when you have decided to sell your business. You may also find it difficult to sell your business if your price is not competitive. Do not just quote a market price from a magazine. You may over-price your business. When a proper valuation is done, the client will find the price fair. You will be confident enough that you are getting the right price for your business. Business valuations are sometimes confusing. Most people do not know the purpose of a valuation. A business valuation is a procedure for assessing the selling price of a business. Although there are many ways of making valuations, the common procedure is to add the cost of the business, the profit and liabilities. The aim is to find the value at which the business would be worth if it was sold today. The present value and future value of the business are calculated. In order to come up with a proper future value, assumptions are made. Allowances for market changes are made. Business valuations may be done on a regular basis, say every year. Doing regular business valuations helps you keep track of the fluctuations that may happen throughout the year. The fluctuations may be depicted on a graph or table. Creditors and other financial institutions may also require...
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