Top 6 Valuation Characteristics Startup Owners Should Know
Are you willing to get your business evaluated? Although a higher value looks good on papers, an unrealistic one can cause trouble. Moreover, this number is an opinion estimated by a professional and the actual market value may vary. However, you can still analyse if your business is valued right with these characteristics:
- Realistic Projections: Financial growth and projections form the basis of a valuation. Thus, for the estimate to be realistic, the growth rate in the estimate projection should be achievable.
- Market Conditions: The economic conditions of your business market are essential factors in calculating the value of a business. For this, financial information should be taken from similar companies (comparables) with a similar business model, growth, geography, and development.
- Intangible Assets: When investing in a startup, investors prioritize options in terms of product strength, entrepreneurial team, and the market. Using strengths while acknowledging weaknesses and focusing on the product and market potential can help. Moreover, adding previous entrepreneurial experience (if any) can also aid a better valuation estimate.
- Story: Every business has a story associated with it. So, if you have a strong one justifying your choice of market, product, and target audience, you can get a higher valuation.
- Presentation: Even the best products fail to attract attention if the package isn’t attractive. Thus, the way you present your business values and assumptions play a huge role.
- Future-Proofing: Besides fundraising, you can use your startup valuation as a metric of growth as well. You can create a measurable benchmark by using repeatable business valuations that deploy a defined set of methodologies.