Company valuation tool

As a small business, it?s important to know the ins and outs of what your business is making. Why, for example, do an incredible 60% of restaurants not make it past their first year — and even more never make it beyond the first four?

The reason is that many people get into business because they enjoy the industry — whether it?s the restaurant business or digital marketing — but they don?t have any actual background in running a business. And as it turns out, there?s a lot more involved than simply making sure your rent is paid and your employees have hours.

You Need Accounting Skills to be Successful

Robert Irvine, who hosts the popular restaurant show Restaurant Impossible, says that it?s incredible, to him, the number of people running a restaurant business who have no idea how much they?re paying out every month in food costs, labor costs, and income statements. He adds that it?s not enough to simply start out with a number and keep using it — ?You have to go further by not just knowing proper restaurant accounting procedures but to also maintain and check the numbers you are generating to ensure they are up to date,? citing a restaurant owner who believed he had a 33% food cost — only for Irvine to realize the owner was relying on ingredient costs from three years ago for his calculations.

How Business Valuation Software Can Help

If you ever want to sell your business — or have someone invest in it so that it can grow further — you?re going to want to know how much it?s worth. With so many figures to keep track of over time, however, this can be quite difficult for the average small business owner who may not have a master?s degree in accounting. To begin with, the two most important documents are the income statement and the balance sheet. You?ll want the past three to five years worth of these documents as well in order to get a true idea of overall valuation (rather than just relying on the current year, which may or may not be representative). A business valuation analysis will be necessary if you plan on selling your business.

Once that?s done, it?s possible to find out the value of your business by examining the earning power versus risk assessment, your assets, and sales of similar businesses in the recent past. Business comps valuation services are important because they can help you establish what your business is comparatively worth.

Conclusion: Say Yes to Business Comps

There are about 5.4 million businesses with employees in the U.S. Are you one of them? Guessing at Your value isn’t going to be good enough — use business comps software so that you can correctly report your company’s value. Learn more about this topic here.

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