Top 9 Ways to Increase Company Value
Imagine that you are going to sell a house and sell it for Rs 75 lakh. No repairs are currently being made. If the house is sold after spending a further Rs 2 lakh on repairs and repairing the house, it may cost Rs 10 lakh.
Similarly in the case of business, if the business has high value it will help the company owners in various ways. High prices can be obtained when the company is sold or the stock is sold.
Shares in any fund raising project are based on valuation. If the value of the company is high, then a few shares may be sold. If the value is less then vice versa. The question for many entrepreneurs in this situation is how can I raise my business valuation? Many factors, both financial and non-financial, can help to increase valuation. Let’s see what it is.
1. Analyze statements
Learn what things will contribute more to your income. The reality is that not every element of your income is profitable. Understand which segment contributes more to profitability and focus more on it. Maximize costs and get more margin. Plan and implement profitability plans in advance.
2. Valuation can be found
Valuation can be carried out using a number of internationally recognized methods such as the asset asset method and the discounted cash flow method. Cash profits will be considered if the discounted cash flow method. Then learn how to increase your cash flow. This can be achieved by reducing the collection period or by obtaining more credit period.
3. Increase assets and reduce liabilities
This is especially true for asset-based companies. But the lower the liability for any company, the higher the value of your business. Extending business to strategic locations can make a big difference as we seek to increase business presence. This will increase your assets as well.
4. Evaluate periodically
It is advisable to evaluate valuation at regular intervals. Then you will be able to find the factors that will help you raise valuation. Moreover, investors can be ready without waiting.
5. Risk factors
Various factors need to be considered when estimating valuation
◆Industry Trend: If the company is in a value-intensive sector, that could impact valuation. On the contrary, the valuation may be lower for well-performing companies in the area of devaluation.
◆Efficiency of Promoters: a critical element in the management of talent management with a revolutionary vision and achievable goals.
◆Company History: This means how the company has performed in the past.
6. Challenges in Valuation
The challenge of valuation is that it is difficult for the investor to understand about valuation. Similarly, validation is only valid for a period of time. This is likely to change for a number of reasons, including the company's operations and the movements in the industry.
Investors often have concerns about DCF-style valuations. Because it is based on management expectations, it can be high when compared to the thumb rule.
How can you convince the investor in these situations?
◆You need to make sure the expectations you have mentioned are realistic. An adequate analysis and research should be done to prove it.
◆Profit margin should be ascertained as per Industry Stardards.
Even now, some companies are losing money in high-volatility fundraising. It happens because the investor is convinced of the company's future growth potential.
7. Know your strength
Companies with a higher priority than anyone else in a particular area or with a Unique Selling Point will be of high value. It emphasizes the importance of a robust and measurable business plan.
8. Find out the benefits
You have to look at your own company through the eyes of an investor. Investors should be aware of the growth of the business and the profits it can make. Investors will be more interested if you can get good exit valuation when you sell your company. It will add more value to the business.
9. Reality
The example of selling a house was mentioned earlier. That is, once the home is ready for sale, the paints are beaten and the price is reached by talking to the buyer. Similarly, a successful transaction will be made only after the investor has reached a decision between the company and the investor. There are many other factors to keep in mind. It is necessary to check whether the institution is able to accept foreign investments. If not, make adjustments. It is always advisable to seek professional advice to estimate valuation.
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