Finimpact

Conclusion

Valuing a small business is sometimes more "art than science." Valuation metrics will depend upon the type of business. A business with many tangible assets such as real estate, equipment, and inventory can attach a value to these assets. The final valuation will depend upon several other factors, including the earnings and cash flow of the business.

In contrast, a service business is more about the number of clients or patients the business has and the potential value of those relationships to a buyer. Beyond any valuation formula, the ultimate value of a business is what a willing buyer is willing to pay for it. This approach applies to either a going concern or a business trying to sell off its assets or client lists because the owner needs or wants to liquidate.

If the valuation is tied to obtaining a business acquisition loan to buy another business or perhaps to purchase another business, consider the Fundera platform. Fundera offers prospective borrowers an opportunity to multiple small business loan options all in one place.
Check out this review of the Fundera platform to learn more and for an independent assessment of the site.

For owners of a small business, their company is often their largest asset. It's always important to know how much this asset is worth for various business and personal planning purposes.


About the Authors

Roger Wohlner

Written by: Roger Wohlner

Freelance Financial and Business Writer

Roger is a financial and business writer who brings his extensive experience as a financial advisor to his writing. He writes on a full range of financial and business topics. Prior to becoming a financial writer and advisor, Roger held a number of corporate financial positions with several companies.

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Somer G. Anderson, Ph.D.

Reviewed by: Somer G. Anderson Ph.D., CPA

Accounting and Finance Professor

Somer G. Anderson has been working in the Accounting and Finance industries for over 20 years as a financial statement auditor, a finance manager in a large healthcare organization, and a Finance and Accounting professor at Maryville University.

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Chip Stapleton

Fact checked by: Chip Stapleton

Finance Manager

Chip Stapleton is a Series 7 and Series 66 license holder, CFA Level 1 exam holder, and currently holds a Life, Accident, and Health License in Indiana. He has 8 years of experience in finance, from financial planning and wealth management to corporate finance and FP&A.

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