What is your business worth? Is it worth simply the time you put into it, or is it only worth the money that you make from it? There are many things that determine the worth of your business, and what it’s worth to you may be different than what it is worth to you.
In order to increase the value of your company, just in case you wanted to sell it or something, you need to know what is considered the value of your business. There are some things that matter more than others when it comes to the worth of a business.
Look At Assets
Your business’ assets matter a great deal when it comes to determining the value of your company. Assets can include all of your product, it can include your office supplies, as well as the rest of your belongings. From business computers to the furniture in your office, these are all assets.
For many businesses the asset with the most worth is the building. If you own the building that your business is housed in then it is part of your assets and you can do some things to increase its worth, especially by doing something about your curb appeal. Location can mean a lot for building worth, but having a nicely paved parking lot and a good paint job and groomed yard, you can easily raise the worth of your building.
How Much Revenue?
There are some special equations that many businesses use in order to calculate the revenue of a business, and it can be confusing. At its most basic, your revenue is the money your business brings in at any period of time, monthly or yearly.
While revenue of an established business will let a potential buyer know how much they can expect to make when they take over, it isn’t exactly the amount of money the business will make. You are missing the part where you need to subtract the money that is going back out, such as supply costs and employee pay.
Actual Earnings
That is where the actual earnings come in. It’s not too hard to figure it out, and just because one owner makes a certain amount from sales, after supplies and employees, doesn’t mean that this will always be the same for a new owner who could cut employees to save money or find a cheaper place to buy supplies.
Basically, if you are a buyer you want to find the best deal on a business that will pay out the most, and if you are the business owner you simply want to get what you can out of the sale of your business. Increase sales, increase profit and do some upkeep and you may get more for your money.