How to Value a Small Business: Ultimate Guide

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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
Why You May Need to Value Your Business
Approaches to Valuing Your Small Business
Asset-Based Approach
Equipment and machinery Technology Inventory Accounts receivable Intangible assets (such as patents, customer list, brand/reputation)
Market Approach
Seller’s Discretionary Earnings Method
Capitalization of Cash Flow
Discounted Cash Flow Method
How to Prepare for the Valuation of a Small Business
Step 1: Get Your Financial Documents in Order
Step 2: Identify All of Your Assets
Step 3: Identify Your Liabilities
Notes payable
Accounts payable
Business loans
Accrued expenses
Any other debts or payables
Step 4: Research Your Industry
The Takeaway
About the Author
Susan Guillory is the president of Egg Marketing, a content marketing firm based in San Diego. She’s written several business books, and has been published on sites including Forbes, AllBusiness, and Cision. She enjoys writing about business and personal credit, financial strategies, loans, and credit cards. Follow her on Twitter @eggmarketing.
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