What is the real value of your business?

    

By Raul Gorrín.-  It is a value question, in the fair value of the enterprises, because we must avoid undervaluation, but also, we must be clear, it is necessary not to overvalue them. The pertinent thing is to give the fair value that the entrepreneurial initiatives have. Yes, probably an entrepreneur is convinced that his organization is worth a million dollars perfectly, it is a good business, productive, profitable, with loyal clients to its portfolio of products.

     However, at the time of wanting to expand the business through the establishment of a new production line, it is necessary to seek financing, investors willing to join the initiative, a matter that requires sincere figures, or to deal with the bank or to convince with exact numbers that man interested in putting his capital in the activity. So it turns out that at the time of making the appraisal the real value of the business is $ 750,000, a not inconsiderable difference of $ 250,000. Then, the doubts come and the business is put in danger. But what happened? You were really convinced that dream of yours for which you have been struggling and working tirelessly was worth a million dollars.

     How could it be mistaken? The answer is that at the time of making the valuations are used criteria and benchmark. The actual aspects that are valued and their importance are unknown, the calculation formulas are incorrectly used; there is no adequate and realistic definition of the terms of the investment round, such as the money sought, milestones to be met, time, among others. However, we will only mention in this opportunity that we have to focus on when making the exact valuation of the enterprise in the objective that has been proposed and the type of investment round is being sought.

     It is necessary to take into account the location which the investment round and reference price or benchmark are made that are representative of that geographical area. That‘s why before releasing into the water, the appropriate thing is to advise properly to avoid surprises.

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