It is important to consider a company’s unwritten worth when determining it’s value. Valuation influences the selling price of a company. Business appraisals are based upon a multitude of criteria and indisputable records such as comparables, projections, EBITDA multiples, and more. An appraiser may overlook the business elements. This is why it is important for the appraiser to first grasp the purpose of an appraisal before getting started.
Is There Unwritten Value?
A prospective buyer is looking for quality in depth of profitability, market share, and management. Key business elements such as operations, value drivers and market are other valued information to potential buyers.
Consider These Questions Regarding A Couple Of These Crucial Elements:
Is there an abundance of market competition?
Are the company goals consistent with advancing technology?
Does the business have more potential beyond a niche?
What’s the company’s competitive advantage?
What are the strengths and weaknesses of its competitors?
Is there a great deal of alternative technologies?
Are there various vendors?
Is the company’s location convenient to its target audience?
Increased Success and Valuation
Businesses that are successful thrive because of company-wide values and consistent customer service. In his book, The 100 Absolutely Unbreakable Laws of Business, Brian Tracy summarizes this as “a company-wide focus on marketing, sales and revenue generation.” He believes that the most important energies of the most talented people in the company must center on the customer. Tracy goes on to say that the failures to focus on sales are the number one causes of business failures.
Tracy believes that trends may be the most pivotal consideration to any given company’s success, and therefore, valuation. Here are a few projected trends for 2019:
– E-commerce will continue its upward growth.
– Customers will demand more control over their data.
– Business and philanthropy will become more intertwined.
Start-up companies are likely practicing as many current trends as possible in an attempt to establish market share. Mature companies are hiring millennials to keep their business hip to those trends. Business owners would benefit from studying and executing the current trends. Acknowledging the successes and mistakes of their competitors could also be a benefit to a business owner.