What is your business worth? Unofrtunately, there is no simple answer. Different people have different opinions on what defines value, making the question itself a tricky one. After all, how much your business is worth today could be quite different than how much you can actually sell it for at a later date. That’s why regularly reviewing the value of your business is so important.
As a startup founder, you will invariably face a time when you need to think about the valuation of your company. Entrepreneurs need to put a value on their startups in order to raise money, and investors need to put a value on their investments to generate liquidity. Whether you’re pre-revenue, post-revenue, in fundraising mode, or simply granting your emplyees stock options, you’ll need to have a valuation to operate from. When trying to determine this, it’s worth utilizing some best practices to justify your number and gain as much leverage as possible in these situations.
On that note, let’s take a look at three basic company valuation methods…