Maximize Your Value Prior To Selling

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How does our valuation process work?

Using A Business Valuation Calculator

Valuing a company can prove difficult, but with the right price a business can attract the right kind of buyers and increase its chances of getting a deal.

When it comes to determining the true value of a company many business owners have gone about it the wrong way. Some undervalue their companies while others overestimate the value of their assets.

The key to successfully sell a business is to present potential buyers with the most accurate value of your business rather than a guesstimate. That’s why we built this calculator to help business owners like you get started with business valuation. 

What You Need For A Business Valuation

The valuation calculator above will be helpful to businesses, buyers, and investors who need to quickly estimate the value of a business.

If you want a more detailed valuation, however, you’ll need to consult with professionals. Business valuation professionals can provide more detailed analysis; they will take into account factors that calculators simply can’t evaluate. Many valuation firms charge thousands of dollars for a service like this, but don’t worry Raincatcher has got you covered.

Raincatcher is a leading business brokerage firm in the U.S with licenses to sell in all 50 states. At Raincatcher, we provide free valuation services to our clients and help ensure they get the maximum value for their businesses. When you partner with us, you get to work with experienced professionals who will help you navigate the sale process so that you can focus on what you’re best at– running your business. 

Using The Business Valuation Calculator

The above valuation calculator is designed to help buyers estimate the value of a business and if you’re selling, it gives you a rough estimate of what your company is worth.

However, a proper business valuation can be complex and time-consuming, especially if you have lots of intangible assets. To determine the true value of a company, intangibles such as cash flow, future growth, and brand recognition will need to be taken into account to put a reasonable price tag on the business.

Keep in mind that valuation metrics vary from industry to industry and from business to business, but here are few things you should look into to better appraise the value of your business. 

1) Know Your Income

One of the first steps in valuing a business is to know what you earn. While strong net income can a be a measure for success, in some industries, gross revenue and cash flow matter a lot more, but the real value of a business lies in whether or not it can generate revenue.

Some business practices can affect the overall value of a business. Overleveraging, for instance, can significantly reduce the market value of a business if debts are not repaid or reduced prior to listing. Many valuation firms employ a method known as EBITDA – earnings before interests, taxes, depreciation, and amortization to determine the liquidity and profitability of a business. 

2) Project Future Growth

A growing business makes for a great selling point. Savvy buyers are not only interested in a business that is profitable but they are also looking for a business with potential for future growth.

While it’s difficult to estimate how big your business will grow in the future, looking at your sales data and customer feedback, you can quickly gauge your business’s future growth and sustainability. 

3) Evaluate risks

There’s no business without risk, but risks vary from business to business. Some businesses are faced with little to no competition, while some are faced with a myriad of challenges, but have greater growth potential.

By working with professionals you can determine the risks and earning potential of your business and price it into the value of your company. This is one of the things that you can’t gauge using business valuation calculator alone.

Selling a business is hard, but knowing the true worth of your company is a great place to start. Once you take into account all of the above, calculating the market value of a business becomes easier and more interesting. 

What The Calculator Does Not Include

The business valuation calculator above and many others on the Internet are essentially math-based and will not take into account many of the things that make your business unique. While you can use the calculator to get a rough estimate of your business value, keep in mind that there are lots of things that the valuation calculator doesn’t factor in and may affect the results you get.

  • Intellectual property
  • Brand reputation
  • Intangible assets
  • Machinery
  • Inventory
  • Physical technology
  • Real estate holdings
  • Other tangible assets

Intangible assets such as intellectual property and brand reputation are difficult to value and valuation calculators are not designed for such a high-level task. You will need to do it manually or work with professionals to determine the value of your intangible assets.

The calculator also doesn’t include tangible business assets such as machinery, Inventory, technology, commercial real estate etc. — things that can significantly increase the value of your company. You can’t truly measure the value of a business without taking into account all of the tangible and intangible assets that make it function.

A calculator can help you get started with business valuation, but you will need to work with a business broker or valuation firm to truly determine the true worth of your business.

By working with a business brokerage firm like Raincatcher, you won’t have to worry about getting your valuation wrong, because you will be assigned professionals who will take care of everything from business analysis to valuation, marketing, and contract negotiation, things that are difficult for any one individual to navigate.