Many business owners run their businesses successfully but when it comes to determining their valuation, they have limited information and hence, become tight-lipped. If you are planning to sell your business or raise money on a startup investment app, you need to sort out your company’s correct valuation.
If you want funding from an investor, you must also learn to determine the value of your company as it can make or break the investor’s decision regarding funding for your company.
Will an investor agree to give you money if you yourself don’t know how much your business is worth? Unlikely.
So, let’s get started!
Once you decide how much of your company you want to give away while asking for money on a raise funding app for startups, you need to figure out your company’s valuation.
Here’s what you can do to assess the right valuation for your company.
Evaluate your assets before valuing your company. You must look at your startup from the eyes of an investor who is willing to invest in startups and small businesses. Put yourself in the investor’s shoes and ascertain whether you would invest in a business with similar assets and resources.
Let’s face the truth, it is extremely hard to identify your startup’s past financial performance and future results. You need a proper financial forecast and only an expert can help you with that.
A financial wizard can help you with an accurate business estimation so that you don’t end up asking too little or too much from an investor.
Take your company’s last annual revenue and multiply the figure by 5 to reach a proper valuation. If you are making a high profit, take that into consideration and increase the valuation suitably.
You must remember to not go overboard with your ask by asking 20 times your revenue! Make a reasonable demand and get a reasonable sum!
If you are designing a pitch to feature on a startup funding app, you must get the valuation right as you won’t get another opportunity to do so. Review your competitor’s valuation for the same purpose.
A competitor means a business with more or less the same resources, company size, profitability, target market, and goals. If only you find these things the same, you should consider their valuation.
If you don’t want to end up without an investor, you need to get your valuation right. Keep all these things in mind and business valuation will automatically appear simple to you.