For most of us entrepreneurs, the purpose of starting and operating a Florida business is to run your own company and (of course) make a profit! However, as time passes by, professionals accept that the purpose of business is to create value through the products or services it provides. So by definition, everyone is in business to create value.
The question is, what is the value of your Florida business? Many businesses presume that the valuation of business is only important when you are trying to sell or exit the business or when a business appraiser is needed when trying to resolve disputes related to taxation, divorce litigation, allocation of business assets, etc. Every business owner should know how much their business is worth, because it’s the only measure that helps you ascertain where your company was, where it is today and, most importantly, where it’s going in the future.
Many businesses find it convenient to attach a higher mental value to their business and it’s not surprising as most of us find our things dearer than others. Nevertheless, it is important to have a realistic idea of how much is your company worth or your estate planning may use a too optimistic number.
Calculating a believable worth of your company or valuation is a complex process and it is safer to hire a professional valuator. For more than 12 years, Business Appraisal Florida has been helping entrepreneurs in Florida to apply the best method to value their business.
If you are interested in the value of the business with an intention to sell or exit the business, then it is crucial to prepare. You will need variety of business information. A partial list is:
- Your financial statements for last 3 years at least
- Details of physical assets and other assets
- Legal documents
- Registration papers
- Business plan
- Competitor’s detail and business comparisons reports
- Employee, Supplier and Customer description/concentrations
The complete list of data needed for a Business Appraisal can be found here.
There are different approaches to measure the value of your business:
- Income Approach: Income approach tries to measure the value of business in terms of how much money the business is likely to generate and what are the risk factors involved. The buyer would be interested in knowing when and what economic benefits can they expect from the business.
- Asset Approach: Every business has many tangible and intangible assets. Tangible assets are physical things and are easy to assess. Intangible assets refer to the goodwill or brand your business has created. Economic principle of substitution is applied under this approach. You should be interested in finding out “What will it cost to create another business like this one that will produce the same economic benefits for its owners?”
- Market Approach: Here the economic principle of competition is applied. Under this approach, the assessment is based on real market data. In the marketplace, what is the worth of the similar business within the same industry. Good market research is crucial under this approach.
It is noteworthy though that there is no one way to establish what a business is worth. Simple reason behind this is that business value means different things to different people. For a business owner the business connection to the community it serves can be the deciding factor. On the other hand for an investor income defines the business value.
Florida based companies are unique in several ways. The state enjoys low tax structure, desirable destination for US and foreign entrepreneurs and advantageous climate. Consequently, it is important to apply accurate and reliable methods to value your Florida Business. We at “Business Appraisal Florida” can help you in estimating your business value by applying 5-8 different methods. Business Appraisal Florida and its sister company Bankers Advocate (a boutique M&A firm doing both Buy Side and Sell Side work for clients). We also compare the appraisal results against what the market says a similar size and location business is worth.
We at Business Appraisals Florida can provide you a reality check! We will determine if the value of your business makes sense in the real world. We have a team of certified business appraisers. We can do valuation of your business which targets the correct audience: partners, family members, shareholders, potential buyers, IRS, estate planning, lenders or potential equity investors.
Business Appraisal Florida has an appraisal product for every size of business and price point. In addition, we have partners who have been appraising Inventory, Machinery and Equipment for 25+ Years.