News & Resources

Importance of business valuation for smaller firms

Feb 14, 2013 Missy Rogers

Business valuation is an essential component of corporate strategy and decision-making, especially when considering selling a company. When business owners do not know how to properly assess the value of their enterprises, they should consider hiring a firm that specializes in the procedures to ensure all decisions are made accurately and profitably.

The New York Times recently reported that many small business owners have no idea of what their company is worth, even when it comes time to speak to potential buyers. According to the news provider, one entrepreneur found this out when first entering the business buying game, when he realized that the sellers were lost in the valuation process. 

"One guy I talked to about selling said the business had to be worth $1 million, because that's what he needed to retire on," Joe Ritz, owner of a specialty repair shop, told the source. "Another was like, ‘Well, let me see, my alimony is $4,500 a month...' It was ridiculous. I finally just gave up and decided to start my own shop."

Small business owners should always keep an eye on the values of their businesses to maximize revenues and ensure smooth sales.