Business Valuation Trends updated for 2021

Business Appraisal Florida (BAF) stays on top of business valuation trends. The unpredictable 2021 pandemic has changed the valuation of many businesses. BAF will keep you updated as we monitor the global business valuation environment and report our findings back to you.

As a business owner, you are fully aware of the key success factors (KSF) of your business and industry. You know your staff, your customers, and your competition. But do you know the value of your business? Because you’re supposed to. Business appraisal is such an important phase in business ownership that many individuals tend to overlook it. Effective business appraisal is required if you want to ensure that you’re on the right path to success. Many company owners consider their firms as their retirement nest egg. Not to mention, you wouldn’t go years without checking how much money is in your Roth IRA, so why would you with your business? This is the critical knowledge needed to prepare accordingly.

On the other hand, you may need to know the valuation of your business at a moment’s notice. If an unsolicited purchase offer for your business comes through the door, will you be able to make the right decision? Business valuation can also aid in the face of unfortunate circumstances, such as a sudden divorce or a sudden need to sell. The appraisal process may take time, which may not be available. Many individuals wrongly assume that their balance sheet reflects the worth of their business. This could not be further from the truth. The value of a business includes not only the balance sheet, but also the intellectual property, reputation, assets, trade secrets, cash flow, and more.

That being said, many factors go into an effective valuation. And now that we’re in the middle of a crisis, it is essential to know that the variables and factors that make up a business appraisal change year to year along with the global economy.

Important Reminders in 2021

The full economic toll from the coronavirus is just now beginning to come to light — but so is the normalization, once the ongoing pandemic presumably fades. According to a recent study by the University of Central Florida Institute for Economic Forecasting, Florida’s economy is predicted to fall by 6% year-on-year in 2021—but is projected to recover by 7.6% in 2021. Moreover, Florida businesses have particular characteristics that may make them more susceptible to new trends. Our low taxes continue to boost our economy and make billions of dollars of international and domestic investment per year. Florida provides a cost-effective alternative to other dynamic high-tech nations. Simply put, property, labor, taxes, and capital are more economical in Florida than in California, Illinois, New Jersey, or New York. In addition, the State includes additional tax benefits for companies in those specific markets or specialized areas.

Aspects Unique to Online Businesses

Now more than ever, your online presence has a critical role to play in the marketplace. It is possible to operate a multimillion-dollar business from your home utilizing a virtual warehouse without ever meeting a client face to face. You have the ability to attract thousands of consumers every day with a small monetary investment. Online’s share of overall retail revenue has increased — with e-commerce penetration exceeding 16.0% in 2019, according to the Digital Commerce (formerly Internet Retailer) review of the Commerce Department’s year-end retail results. That was up from 14.4% in 2018 and 13.2% in 2017.

Home Flipping

Florida is the “home” of home flipping. The home flipping industry gives a major boost to Florida’s economy. The estimated home valuation in Florida is $233,700. In 2019, home prices in Florida have risen by 6.3 % over the past year and are projected to grow by another 3.6% over the next year. The median price of the properties currently listed is $295,000, which allows space for investors to make a profit off a real estate flip. The demand in the housing market continues to skyrocket, and houses were bought up within days of being listed. This is surprising given that many big banks are still wary of giving out home loans as they did before the recession. This will draw a lot of attention to Florida, possibly increasing rent for brick and mortar stores as well. We here at Business Appraisal Florida are closely watching the effects of this surging industry and the value of contractors and services that feed upon it.

Cyber Security and Compliance

The cost of cybersecurity is going through the roof. The Wyndham Hotel federal court decision that gave the FTC the power to enforce strict security regulations on businesses that handle sensitive customer information has created a massive investment in Cyber Security Compliance. Businesses that offer Cyber Security and training are seeing an increase in revenue.

Local Trust and Relationships with Customers

Americans are starting to recall the “good old days” and are concentrating on buying local and helping small businesses. Floridians are continuing to have less and less trust in major brand name companies. The huge migration of industrial and service workers abroad has left a sour taste in the mouth of consumers. Local customers will continue to seek out and help businesses that benefit their local neighborhoods through job creation and friendly ownership. Consumers are fed up with trusting mega-corporations with their precious information, only to learn that they have been hacked. Florida businesses have something these large companies don’t have: community reputation and trust. You’re not simply building a reputation. You’re creating value. Your collective credibility can be invaluable to you. Business Appraisal Florida’s goal is to help you monetize your company’s Goodwill.

Contact Business Appraisal Florida for a No Cost Consultation

An accredited or certified business valuation provides value to you and your family. Family members and partners may have emotional ties to your business that cloud your view of your company’s value. We understand that it is hard to put a price on something you love, but we will pour over every aspect of your business to help value it in today’s ever-changing marketplace. We have been providing Florida businesses with valuation services for over seventeen years. Trust Business Appraisal Florida to provide you with a reliable and dependable valuation.