Understanding What Your Company is Worth

Even if you aren't selling, it's important to know your firm's value

owner also owns their building, and they’ve been in it for a long time, it’s often hard to sell the business with the real estate included. That’s because the company may not produce enough cash flow to cover the cost of the appreciated real estate,” Trenier Wiley says. “What I would do then is have the owner retain the real estate and lease it back to the new owner.”

It’s important to know the different methods for calculating your company’s worth. “Depending upon the one chosen, the value of the business can change significantly,” Price says.

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  • Hello. I just graduated with my masters this summer.I am looking to start a graphic tee business with my younger brother. Obviously to kick this up , I need funding. I told a fellow worker at my internship about the idea and he said that he would love to help with funding the project. As long as he gains a dollar for each sale we make. I was wondering if this is a fair proposition and how long must this 1 dollar share last?

    Thank you.


  • Jeff K

    I don’t feel like this is a BAD idea and i think it’s very fair. But some of the questions I would ask to include yours; would be before or after expenses. In some cases; your only profit in the beginning would amount to a single share. Could this start only after the business begin to show a profit; just becaus you sell a tee all of the proceeds aren’t necessarily profit. So i would definitely take him up on his offer but be sure to get a clear undestanding of what is expected.