Starting a business valuation can be overwhelming, but with the right preparation and guidance, it becomes a straightforward process. This checklist is your guide to getting organized, ensuring a smooth valuation process tailored to your business needs.
Step 1:
Define Your Valuation Goals
Your reasons for seeking a valuation will shape the entire process. Common goals include:
• Exit or Succession Planning
• Growth and Expansion
• Financing or Fundraising
• Tax and Estate Planning
Step 2:
Compile Key Financial Documents
Financial transparency is crucial. Collect the following:
• Profit & Loss Statements (at least three years)
• Balance Sheets (comprehensive record of assets and liabilities)
• Cash Flow Statements (insights into cash movements)
• Tax Returns (verified financial history)
Step 3:
Clean Up and Organize Financials
Even if your financials aren’t perfect, you can enhance their clarity by:
• Identifying and excluding non-recurring expenses
• Separating personal and business expenses
• Normalizing owner compensation to align with industry standards
Step 4:
Document All Assets
Create a detailed inventory of your assets:
• Tangible Assets: Equipment, property, inventory
• Intangible Assets: Brand value, patents, client lists
• Intellectual Property: Proprietary technology, trademarks
Step 5:
Assess Market and Industry Position
Understanding your market context is essential. Research:
• Competitor Benchmarks: The valuation of similar businesses
• Industry Trends: Current and emerging trends in your field
• Economic Climate: Broader economic factors affecting your business
Step 6:
Organize Legal Documentation
Gather legal documents to ensure compliance and clarity:
• Contracts: Leases, vendor agreements, employee contracts
• Intellectual Property Documents: Proof of patents and trademarks
• Ownership Structure: Articles of incorporation, shareholder agreements
Step 7:
Review Key Business Metrics
Demonstrate your business’s health and growth potential with metrics like:
• Revenue Trends: Consistency signals stability
• Profit Margins: Higher margins indicate efficiency
• Customer Retention: Reflects a loyal customer base
Step 8:
Engage with Stakeholders
Consult with key stakeholders to align goals and gather insights:
• Owners and Executives: Define valuation objectives
• Financial and Legal Advisors: Ensure comprehensive documentation
• Partners and Investors: Align on valuation goals
Step 9:
Schedule a Preliminary Consultation with Tabulate
This consultation helps identify your needs and any missing documentation:
• Discuss Goals: Clarify your valuation purpose
• Identify Gaps: Address missing information
• Outline Next Steps: Create a roadmap for your valuation
Step 10:
Set Up a Secure Document Storage System
Secure sharing and organization of sensitive documents is vital:
• Use digital storage platforms (e.g., Google Drive, Dropbox)
• Maintain backup copies of essential documents
• Restrict access with permission settings
Final Checklist Summary
Before you begin, ensure you’ve:
1. Defined your goals
2. Gathered financials
3. Organized expenses
4. Listed assets
5. Assessed market conditions
6. Collected legal documents
7. Reviewed business metrics
8. Engaged stakeholders
9. Scheduled your consultation
10. Secured your documents
Why Work with Tabulate?
Tabulate supports your valuation journey by providing:
• Expert Guidance: Assistance with every step
• Transparency: Clear communication and milestones
• Actionable Results: A detailed report tailored to your goals
Ready to Get Started?
Contact Tabulate today to kick off your valuation with confidence.