When Disney bought Pixar, they paid around $7 billion.
That’s a lot of guacamole to pay for a business, but that’s also the value of creating a successful business. Pixar created something valuable and ambitious and it was a competitor to Disney, which is why Disney acquired them.
If you’re considering selling your business and want to figure out how to value your business, it can be difficult because there are a lot of different factors to consider.
You need to consider the best tips and ways to value your business without being taken advantage of and underselling your business.
Here’s a guide on everything you need to know when it comes to figuring out your business worth.
Table of Contents
What’s Your Revenue?
The first part of assessing how much your business is worth is looking at your revenue. You need to assess how much you are earning per year, which can give you insight into how many clients you have or what other businesses will value you at.
When you figure out how much your business is making in revenue, it can help you assess how much profit your business is making. More importantly, it gives the buyer’s an idea of how much your business is making.
When you look at revenue instead of marketing or assets, it helps you sell your business based on what you’ve accomplished in your business.
Similarly, you are telling the business based on the clients you’ve accumulated because they represent how much you are earning in revenue.
You can also review this resource when it comes to selling your business or mergers and acquisitions.
How Much Have You Accumulated in Assets?
Another way of valuing a business is to determine your assets. However, this can be confusing because there are various kinds of assets you have to account for if you are considering selling your business.
Here’s a breakdown of some of the assets you need to consider when valuing your business.
Fixed assets are usually considered long-term assets. They are sometimes more difficult to determine when looking to sell.
For example, fixed assets are usually buildings. machinery, equipment, and furniture. If you have a lot of fixed assets, it can help make your business more valuable, especially if your assets are critical to your business operation.
If you’ve accumulated a lot of assets like having multiple business buildings, it can help your business be more valuable when you considering selling in the future.
When you think of something intangible, it usually means you can’t physically touch it. This is the way when it comes to intangible assets.
Intangible assets will include intellectual property, licenses, trademarks, a brand, or something else that represents the value of a business.
For example, if Nike were selling their business, they would also have to sell the rights to “Just Do It” as well as the logo of Nike. This is something that has defined Nike and what makes it unique.
Your intangible assets are basically giving away everything you’ve created on paper as a business to whoever is buying your business.
What’s Your Market Value?
The final part of valuing your business is knowing it’s market value. You want to determine the market value in multiple ways.
One of the ways to determine market value is to look at the stock market of your business. You want to see how much your business is worth per share. This value can go up or down depending on the market and how it fluctuates.
Another way to value your business is to see how it compares to competitors. Here are some other ways to value your business that can be helpful before you sell.
Compare With Your Competitors
Another way to consider your market value or to see the potential value of your business is to look at your competitors. You want to see how they valued and work in the stock market.
When you compare your business to your competitors, it can give you a good idea of where your business ranks and what you need to do to increase the value of your business.
It could be that you need a better marketing strategy, less debt, more profit per year, and other variables that can enhance the growth and value of your overall business.
Other Factors to Consider
Other factors to consider when looking at the value of your business is your niche and how profitable your niche is.
For example, you may need to sell sooner rather than later if your business niche is slowing down in the next couple of years or if it’s relocating to becoming more of an online business.
You will either have to update your business to meet the needs of the consumer, which can help give your business more value or you can sell your business before the industry changes.
The final factor to consider is the growth of your business. If you’re wondering what the value of your business is a year or two years, you have to look at what kind of growth you are having.
You don’t want to undervalue your business and realize it’s worth millions more in a couple of years.
Now You Know How to Value Your Business
Learning how to value your business can be a challenge because you are trying to figure out the best ways to put a value on it. You are trying to determine the value of your business based on assets or other factors.
This guide can help you determine what your business is worth in multiple ways. The overall goal is to see what your business is worth so you can sell it for the most in the market.
If you liked this article, you can check out more like it by visiting the business section of our website.