Ideally, a business is run tirelessly and either passed on to the next generation within the family or sold off to the right buyer, at the right price. However, most business owners only gauge the value of their business when they decide to sell. This often leads to several lost opportunities during the tenure of the business. Knowing the worth of your business can help you in several areas such as planning investments, exit strategies, insurance and much more.
Why keep track of a business’s value?
- To Expand your Business
When thinking about business expansion, awareness of your business’s worth can help you gauge the need for external funding and assist in acquiring the required finance. You are more likely to cultivate confidence in lenders where you able to show awareness of the various components of your business and their contribution to its overall value.
- To Know Your Retirement Plan
Australian businessmen work tirelessly to ensure that they have a retirement fund that will allow them to live as they see fit, once they choose to retire. The basis for this lies in the fact that most business owners seek to grow their business and then sell it off to access the retirement fund. However, understanding your business value today can help you to better plan for this future.
- To Protect Yourself
Unfortunate incidents can happen at any given time. In order to look out for your family in terms of handing over your estate to them, they need to know its value.
- To Get Insured
Getting your business insured is of critical importance. However, an appropriate insurance scheme can only be formulated if the business is valued recently. We recommend that you speak to your insurer or broker regarding this matter.
- To Sell Off
We recommend getting a valuation done many months or even years prior to thinking about selling. This can enable you to focus on generating more EBIT (Earnings Before Interest and Tax), which will further increase the value of your business.