How Much Is My Business Worth? A Detailed Guide
What business is thriving, despite the pandemic?
Madeline Sandlin is the director of business development for a delivery food company called GrubSouth. The professional food delivery service has been in demand since the pandemic struck.
Madeline said they recently had to bring on 30 new drivers, and they still need more! It’s great to see that not every business has had to take a financial hit because of the coronavirus crisis.
If you’re wondering, “how much is my business worth?” you’re in the right place! Whether you’re trying to determine the impact COVID-19 had on your company’s finances or you’re just curious where you stand, we can help.
Read on to learn how to calculate how much a business is worth.
How Much Is My Business Worth Based on Income?
First, let’s tackle the question, how much is my business worth when it comes to income? Here are three steps to determine your net income:
- Add up total revenue
- Subtract operating costs and expenses
- Subtract taxes
Once you finish all 3 steps, you’ll know how much your business is earning every year. In addition to income, you can also click here to discover other valuation methods such as market value. Next, let’s look at how to determine what your tangible assets are while also figuring out their value.
To learn how to calculate how much a business is a worth based on tangible assets, you’ll first need a list of all your tangible assets. Tangible assets are the physical things your company owns.
For instance company vehicles, buildings, and cash are all examples of tangible assets. While certain tangible assets will be easy to calculate, like cash, other assets, like company vehicles, can be a bit more tricky.
To determine the actual cash value of your company’s vehicles, talk to your insurance agent. They’ll be able to help you assess what your vehicle’s actual cash values are.
Next, let’s answer the question of how much is my company worth when it comes to intangible assets. Intangible assets are all of the things your company owns, that isn’t physical. For instance, your brand, patents, copyrights, trademarks, and other types of intellectual property, are all intangible assets.
To determine the value of your intangible assets, you’ll first need to ask yourself a few questions. For instance, how much would someone be willing to pay for each asset?
Next, determine how much of your operating income the asset generates. Finally, map out the history and future development of each intangible asset.
Know Your Value
The next time you’re wondering, “how much is my business worth?”, you’ll already know what steps to take to get your answer. What approach do you think you’ll take first to determine your business worth?
Will you be calculating your net income? Or are you going to focus on the valuation of your tangible and intangible assets?
To get the full financial picture, go ahead and do a valuation for all of the categories today. For more articles like this one, check out the rest of this site.