Below are some important methods that can be used for small business valuations using the company’s financial statements and cash flow projections:
– Market Assessment: This method requires market research and assessment to evaluate the valuation of other comparable businesses in your field. But this method is highly volatile, as the evaluation is highly dependent on the fair market valuations, which can rise and fall over a period of time.
– Asset-Based Business Valuations: In this method, we evaluate all of your business resources, possessions, assets, debts, and liabilities. Using this information you can calculate the exact business value by adding all the assets and deducting the sum total of the liabilities from the sum. This can be reflected in the company’s annual financial reports. But beware as this is the minimum value of your business. If your business is faring well in the industry, it is advisable not to sell your business at the book value.
– Cash flow Projections and Income: In this method, a business’ financial history is evaluated. If your business can demonstrate its low-risk profile as compared to your competitors, your small-scale business is assessed at a much higher price.
Considering how complicated and technical these methods can get, it is always a better choice to consult a well-reputed and experienced appraiser for their professional financial services. Asset Valuation Group Australia is a team of professional advisors who ensure that they carefully plan and evaluate all the aspects of your business and give you the best valuations for your small businesses.