16th July
Just like the Tip of an Iceberg can do a massive destruction, a small business having high valuation can crash the financial markets.
Yes, Valuations matter that much.
For a Small-Medium Enterprise (SME), they matter much more.
What is an SME Valuation?
It is the economic value of a particular section or of the whole firm.
This metric analyses the company’s capital structure, management, the market value of assets, and future earnings.
Why is it important?
1. If you want to plan out your taxes, it is important to value your business correctly
2. Valuation of a business determines growth opportunities which may lead to expansion
3. Banks & Financial institutions might require a legitimate SME valuation when you seek credit or loan
4. Sharks have proved how important is valuation when investors are making an investing decision
5. If one is planning to sell their small business, it is first important to get a proper valuation of the same
6. In case you wish to buy out other owners, valuation of a business is essential to understand the exact net worth
7. A business valuation also becomes mandatory if you are planning to offer equity to employees
8. Creating a proper valuation helps in decision-making by pointing out strengths and weaknesses of the company
It is important to ascertain and calculate a proper SME valuation and I recommend getting it done by a professional.
What are your views on this?
Let’s Discuss!
#sme #smevaluations #ipo
