One of the major problems that has suddenly come to the attention of the general public is that of valuation. I’m not saying that valuation is a bad thing in any respect, but rather that the values of properties and business have been thrust into the public spotlight and now more people are having to consider assets in terms that business people have been thinking in for quite some time.
The real issue, however, is that they’re picking up the same bad habits that so many business people already have, specifically that things like valuation are only to be done when absolutely necessary, usually when selling the company or asking for a loan. However, why on Earth wouldn’t you want to know the value of your company at other times?
Just to take one example, what if you, as the business owner, want to start preparing for a transfer of power, either to family members or some specific person/group? How can you do that accurately without knowing the value of the company? If something should happen to you, not knowing the current value of your company will increase the amount that it will cost both in terms of taxes and the legal fees involved in sorting out exactly who gets what and in what proportion.
The fact of the matter is, it’s important to occasionally value your company even if you aren’t asking for money or trying to sell it. The only way that you can understand how your business is growing is to have a general idea of where it is now as compared to before, and estimation might be enough for some circumstances, but having a solid foundation with which to work gives you the chance to plan a cohesive strategy for the future of your company. It also makes it easier for your company to live on past you.
