Why do New Business owners need a valuation report?


VIP Contributor
A valuation report is an essential tool for any business owner—especially one who is in the process of starting up or just getting off the ground. If you don't know how your company is valued, how can you know how much it's worth? If you don't know how much it's worth, how can you make sure that when someone offers to buy it, you're not selling yourself short?

For one, you can use your valuation to get funding. No matter how solid your product is or how great your market is, if you don't have a good sense of what it's worth and what your company is worth, you're going to find it hard to get anyone to invest in you.
For another, you can use it as leverage with your investors. If you know exactly how much the company is worth and can explain why, you can use that knowledge to get better terms for payments and interest rates.

Finally, if your company grows it's going to need to be valued again—but this time by an independent third party who will look at all the new information about the business and make sure everyone involved is seeing the same numbers. That way, when it comes time for a sale or dissolution, there are no nasty surprises.