If your business has begun to rapidly expand or you are considering selling it in the near future, it wouldn’t be a bad idea to have it appraised. A business appraisal, which is also called a business valuation, allows a business owner to understand what their business is worth at any given time, and is highly important to know as various opportunities and tragedies may require knowing this information.
Domainers are already having their domain names appraised to determine the resale value on them, so why wouldn’t you have an appraisal conducted for your entire business? In addition to helping you determine the actual worth of your business, business appraisals also help you determine:
The Value of Marketable Assets
Knowing the potential value of your company’s marketable assets is highly beneficial should your business be liquidated. Although no one wants to believe that their business could be liquidated, the market for businesses has been so tough, that anything is possible. A business could be looking great one week and go under the next. By knowing your marketable assets, you will know exactly what you are able to sell should your business begin failing which could save you thousands of dollars in the long run.
The Value of Interest for Personal Planning
If you know the approximate value of your business, you will know how much coverage or insurance you will need. Knowing the value will also allow you to better prepare for retirement and for death as you will know how much additional income you may obtain during your retirement years, or how much your loved ones will be left with should you perish.
The Value of Each Owner’s Interest
Did you start on online business with your roommate? Is half your frat house invested in your business? A business appraisal will help you assess how much each owner should receive should you choose to sell the business. Not only will this help argument be avoided later on the down the road, but it will also help ensure that business continues to be conducted fairly amongst owners.
There are several ways that a business appraisal may be conducted. A business owner can perform one themselves by using their own balance sheets, or they may employ the professional help of a business valuation firm. Although all business owners should perform a business appraisal themselves, a professional appraisal is recommended as all guesswork will be removed from the equation. The price for a professional appraisal can be expensive though so only serious business owners should consider employing the services of such firms.