Importance of Valuations
Business owners who are interested in learning the true value of their companies will do well to hire professional independent valuation services to perform this task for their company. There are several reasons that this might be something valuable to a business, even if there is no intention of any kind to sell the business or to place it on the public market.
Credit can be based on value. A business that wants to move forward may require a line of credit. In fact, unless the business is built completely on ideas, such as the case of artists and writers, credit is almost a necessity. One way to obtain credit is by proving the value of the business. This helps bankers decide that the risk may be worth it if the business is highly valuable. This is a pattern that can be repeated as the credit helps the business to grow and more credit is developed.
Businesses specialize for a reason. Successful businesses build their reputation on their success in specific areas. Business valuation services are no different. An accountant may be able to guess at an approximate value, but independent business valuation services tend to be better versed in the details of a valuation. This idea is comparable to other businesses. For instance, plumbers become certified in plumbing and can be relied on to know all of the ins and outs of this trade. They do not sell electrical services because that is not the field they are an authority in each and every day.
Internal valuations are unreliable. When a value is placed on a business, it is always good to get an outside, professional opinion. After all, people who are looking to buy or invest in a business are not all that interested in the opinions of what the owners think. They want to know how the business is seen by someone that really does not have an interest in it so that they know it is a true value and not biased in any way.
Dale S. Richards specializes in management, marketing, operation optimization & business valuation consulting and is a 20+ year turnaround expert. He has implemented success concepts into results in 150+ companies. Dale is a Certified Valuation Analyst (CVA) with NACVA and is a Vistage International CEO Board Chair in Utah. Visit www.successbiznow.com to learn more about Dale and business valuation services.