Ever wondered how much your business is worth? Maybe you're thinking of selling, or just curious about how your hard work is paying off. Figuring out your business value can be daunting, but it doesn't have to be! This post will break down some simple ways to get a good idea of where you stand.

Think About Your Business Like a Prized Possession

Imagine you're selling your favorite car. You wouldn't just throw out a random number, right? You'd consider its mileage, condition, and maybe even how cool it looks. Evaluating a business is similar. We're looking at different factors to determine its worth.

Here are 3 key areas to consider:

• Financial Health: This is all about the money coming in (revenue) and going out (expenses). Strong, consistent profits are a good sign! You'll want to look at your bank statements and financial records to get a clear picture.
• Assets: What stuff does your business own? This could be equipment, inventory, even furniture. Add up the value of these things.
• Market: How are similar businesses doing in your industry? If businesses like yours are selling for a certain amount, that can be a clue to your own value.

Let's Get Practical: Simple Tools for Beginners

• The Asset Approach: This is like the car example. Add up the value of everything your business owns, then subtract any debts you owe. This gives you a baseline value based on what you have on hand.
• The Income Approach: Look at your average profits over the past few years. Investors are interested in future earnings, so you might also try to estimate how much profit you expect to make in the coming years.
• Market Comparisons: Do some research on similar businesses that have recently sold. This can give you a good idea of what ballpark you might be in.
• Monthly recurring income: Anyone who will invest in your business will expect some returns in the soonest time possible, thus, in general it is a good rule of thumb not to price your company over a maximum of five years worth of income.

Don't forget your personal brand!

Remember, always take into consideration the effect of your personal brand on your business. If your companie's success highly depends on your brand, it will be very difficult to sell it as there is a really low chance that it would work without you. For example, if you have a YouTube channel and you are the primary face of the videos, changing you to a new host could lead to a high wave of unsubscription thus anyone interested in buying your channel would have to keep you in the business otherwise it could really easily collapse

Remember, this is a starting point!

A professional valuation can be more complex and consider additional factors. But for a basic understanding, these methods can be a helpful first step.

Final Tip: It's All About Your Goals

Maybe you're just curious about your business's worth. Or perhaps you're seriously considering selling. Knowing your business value will help you make informed decisions.