AMB Performance Group Blog

Top 7 Reasons Why Business Valuation is Needed

Posted on: May 12, 2022
Business Valuation

The only constant is change. This is a perennial tenant of the business world.  But now, more than ever, it holds true. In a time of constant change and evolution, it is necessary to take every step possible to keep up, get ahead, and prepare for the future, whatever that may hold. This is why it is a smart strategic move – and a mission-critical one – to know, beyond a guess, what your company is worth. Knowledge. Is. Power. Here’s why business valuation is needed – and how you can leverage these insights to achieve your overarching goals and objectives.

business valuation

Why Business Valuation Is Needed

Business valuation is a process by which you determine the worth of your business in terms of the current market. Why does this matter?

  1. Understanding Where You Are

Where do you stand now? How far have you come since the business was founded? If you don’t know where you are, it is very difficult to get where you want to go.

  1. Chart a Path for Growth 

Understanding your baseline value empowers you to make more balanced, informed decisions when it comes to strategic, financial, and marketing aspects of your business. With a valuation, you have more insight into your growth potential – and this can spark new ideas and innovation.

  1. Plan for Retirement

If you do not actively plan for retirement, it is all too easy to let today’s worries become tomorrow’s hassles. You need a solid exit plan and, of course, the financial wherewithal to retire comfortably and securely.  A business valuation is a useful tool in this endeavor. 

  1. Prepare for The Next Stage

Do you want to hand the reins to someone else, such as a partner? Do you want to sell? Planning for the next phase of your company, career, and life is challenging – but understanding the worth of your business gives you the solid foundation you need for effective strategizing, as well as growing value so you can leapfrog into “what’s next” with surer footing. 

  1. Protect Your Asset

To fully protect your business when it comes to taxes, legal issues, insurance, finances, etc., you need to know its worth. Remember, this is likely your most significant asset. When handled properly, you can leverage your company to ensure a strong, bright future. 

  1. Improve Your Borrowing Power 

Lenders want to know that you are a safe bet. If you need financing, one of the first steps is conducting a valuation. This will be evidence that your business is viable and able to honor the terms of your loans. 

  1. Properly Insure Your Business

In many cases, a valuation is essential when purchasing appropriate insurance policies against the business, as well as “key person insurance.” As with matters related to lending, insurance companies need to understand what they are protecting – and you need to ensure that your business has the protection it needs.

There are many reasons why business valuation is needed; take the first step by contacting AMB Performance Group. Get the information and insights you need to meet your most important goals.

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