5 Important Factors

 You may want to know what your startup business is worth today, based on the growing market. Or does your company look like a beautiful looking, well structured, nice color matched Bungalow? And maybe you want to reconstruct it; to make it bigger and a superlative edifice.

Well, today we will talk about 5 important factors professionals consider when valuing a company, which I think should be in your note.

On the other hand, I recommend that young and aspiring entrepreneurs should take those important factors seriously. What I mean by that is, it's like when you want to buy or sell a landed property in a given place. I mean you should know the factors that make houses in that place go for a particular price. You should be informed so that you will not blindly buy above, or sell below what the market is willing to pay at a given time.

Company Valuation

Company valuation is based on your asset values and future earning abilities, which you may develop and lead to future success, which also may or may not materialize.

So now, the 5 important factors I think you should know, before your company/startup company valuation:

#5. The market price of the stock of corporations in that same industry, whose stock actively traded in an open market, or in exchange.

There are many industries which you know. There is medical industry, there is transportation industry, music industry, manufacturing industry etc. So what that means is, for example, you manufacture some piece of software. The market price of the stock of Dell, Microsoft, etc. Which are in the same industry you are, as a software manufacturer. Now, that will consider the way you're valued.

#4. Investors will value your Gross block equity interest. It means that professionals will calculate all your total company assets, such as computers, furniture, the building, cash and value them.

#3. The company's common stock equity as seen in the balance sheet, and the present financial condition of the business. Again, you will need to present the securities of your of your shareholders. Examples: providing voting rights and entitlement of shareholders to a share of the company's benefits, through capital appreciation, as detailed on your balance sheet. And again, is the company advancing financially or liquidating? What is the financial health like?

#2. The general economic forecasting and the condition, and the point of view of the specific industry in particular. It's just like I mentioned above, (the industries). Let's take manufacturing industry again for example. What is the value of the manufacturing industry to the economy of your country, or in the global market as a manufacturer?