Free Business Valuation Software
Our free business valuation software online will let you quickly arrive at an estimated value for your business. This is a great tool for all types of companies looking for a quick and easy business valuation. It will also help you place a value on an Internet website or blog if you own one.
You can start using our free business valuation software immediately.
On the working screen under the 'Current Assets' category, you will click on the 1st box called 'Cash' and enter the appropriate numbers for that box. After entering the correct numbers, click on the next box and do the same. As you click on each box and fill it in, the free business valuation software will automatically do the calculations for you.
Easy step-by-step instructions. In addition, you can run what-if scenarios to see how different numbers affect the price of your business.
The first set of numbers asked for are 'Current Assets'. Current Assets are applicable for the last twelve months only, and are the most liquid assets (readily convertible to cash), they are self-explanatory.
Next we come to 'Fixed Assets'. 'Fixed Assets' are your long-term assets that depreciate in value over time. You will notice that you are asked for accumulated depreciation. You should be able to find these numbers on your tax return’s and previous balance sheets.
From here we move on to 'Other Assets'. Other Assets are assets that are not covered by any of the other fields (such as your web site - web site value is covered just below), this also includes the value of your customers.
It is ideal if you have a database of customer sales figures so you can work out the value of your customers. However, if you do not have a database, you can still work out the value of your customers by estimating - making an educated guess as to the number of customers you have, the average sale value, the average cost of that sale (product cost), and the number of times each customer buys per year. If you cannot estimate these numbers, just leave them as zero.
IMPORTANT: Having a database with these figures is added proof of the value of your customers (goodwill), and ultimately will make your business worth more. As it is, the customers (and the income they make the owner) are what really interests someone when they are looking to buy a business. It should be noted that some businesses would find it hard to have a database (such as fast-food outlets and so on). These businesses should use estimation as best as they can by using sales volume numbers.
WEB SITE VALUE: If you have paid someone to design your web site you already know how much it cost you. This number is entered into the area called 'Web Site Creation Cost.' 'Other Web Site Costs' are for any other costs incurred in the creation of your web site that are not covered by any of the other areas listed.
From the 'Assets' section we move on to the 'Liability' section. The first set of liability figures are 'Current Liabilities'. As with the 'Current Assets', the 'Current Liabilities' are for the last twelve months only. The section titled 'Other liabilities' should contain any other current liabilities not previously listed (which would also include your web site expenses - hosting fees etc.)
After 'Current Liabilities' we come to 'Long-Term Liabilities'. These are any and all liabilities still owing, which extend further than twelve months. These would include things such as mortgages, equity loans, etc.
'Owners Equity' is any amount of money the owner has invested in the business that is to be removed. This may include money added from the owner's personal account to buy new equipment and so on. From this section we move on to 'Profits and Earnings'. These figures can be found in your tax return, profit/loss statement, or balance sheet.
From here we move on to a very important final figure that is needed; and that is the highest possible long-term bank interest rate on a savings account, CD, or other secure investment. This figure may require some research on your part.
What you have to do is enter the highest bank interest rate you can find on a savings or investment account for a long-term deposit. This interest rate needs to be independent of the amount of money needed.
To clarify this: A term deposit of $10,000 for 1-year will pay less interest than a $150,000 term deposit of 5 years or longer. So the interest rate you would place in this field is the one from the $150,000 5-year term deposit or longer. The reason for this is that using a short-term interest rate, or a rate that is too low, would inflate the price of the business value to an unrealistic level.
Once this final figure is entered, you will see the estimated value of the business and the ROI (Return on Investment); you can then save and print your appraisal report.