Getting all your credit solutions together
All business valuations involve individuals estimating what they think a business is worth (or will be worth) on a particular day, assuming certain circumstances. Valuation is, therefore, not an exact science. However, if you follow the guidelines in this article you should be able to have a reasonable idea of what your business is currently worth and a basis on which to estimate what it could be worth in the future.
In planning your exit you need to know with some certainty not only how much your business is worth now, but also what it is likely to be worth when you plan to exit. This puts all your plans in context and helps you decide such things as your likely exit timetable and even your retirement planning.
We started this blog by considering the owner’s business aims. These will usually include achieving certain target values for the business by the time of exit. Estimates of future value will be based on profit projections, which will rely on certain operating objectives being achieved within the business. Naturally, there will be a degree of uncertainty surrounding future values, especially if your projections are several years ahead. However, it is better to have some parameters and goals to aim at (despite their uncertainty) than merely to soldier on with no idea where you want to go and what you are trying to achieve.