When it comes to business, it is highly important for investors to see the company’s financial standing as this directly reflects the market’s interest and acceptance of a company’s products and services. One of the most fundamental facts about businesses is that the operating performance of the firm shapes its financial structure. However, it is also true that the financial situation of the firm can also determine its operating performance.

Your business’s financial standing measures your company’s overall health. The process of determining the latter is called “business valuation.” It is often conducted to provide an accurate snapshot of your company’s financial performance to both current and potential investors. Your business valuation is of utmost importance to them as they are getting the company share in lieu of the money that they spent, or are going to spend, if ever they decide to invest.

Methods of Valuation:

  1. Discounted Cash Flow:Discounted cash flow is used to find out the value of the company as of today based on the projections of all the cash that could be made available to investors in the future. It considers the principle of “time value of money” (i.e. cash in the future is worth less than available cash today).
  2. Comparable Company Multiple:Comparable companies’ analysis involves the comparison of operating metrics and valuation multiples of comparable public companies with the same target market.
  3. Precedent Transaction Multiple:It is a valuation method in which the price and valuation of similar companies in recent transaction is considered as an indicator of a company’s value. Precedent transaction analysis creates an estimate of what a share of stock might be worth in case of an acquisition.

Challenges with valuation of a startup

  • Small or no revenues, operating losses:In case of startups in initial stage, revenues are small or non-existent for idea companies and the expenses often are associated with getting the business established, rather than generating revenues.
  • Many don’t survive:Many startups fail for a number of reasons such as lack of experience and funds, no clarity on business idea, legal barriers amongst others.
  • Multiple claims on equity:To protect their interests, preceding equity investors demand and get protection against this eventuality in the form of first claims on cash flows from operations and in liquidation and with control or veto rights, allowing them to have a say in the firm’s actions.
  • Investments are illiquid:Equity investments in young firms tend to be privately held and in non-standardized units. They are also much more illiquid than investments in publicly traded companies.

When it comes to business valuation, it is indeed true that startups face a number of challenges. The business is only starting, and the company’s financial standing might not be that established yet. However, with creativity, new ideas, and teamwork, the business will surely improve. There are many internal and external factors affecting business valuation. Also, notwithstanding of the valuation technique used, or the challenges faced, valuation mainly depends upon the demand and the value propositions that the company brings in for the society.

startup investment platform | Angel investment in India


Why will I hire a professional when I can do it by myself

Gardening and maintaining your landscape can be a very fun and fulfilling activity. Aside from getting the chance to take care of nature, you will also be able to beautify your home according to your family’s wishes. However, some landscaping tasks are better off with professionals.

“Professionals? Why do I need to hire them when I can do these things for myself?”

A professional is somebody who conforms to the ethical standards of a profession- someone who is educated and well-informed about a certain field. Professionals can work on things that you find difficult, monotonous or dull.

When your time is so limited and your job requires so much of your attention and energy, how would you be able to balance doing other tasks and taking care of your family? If you are constantly busy and in need of someone to take care of your kids, you are clearly in need of a professional babysitter. Or if you want to train your dogs but you just can’t find it in your fully-booked schedule to spend time with them, professional dog trainers are always available.

How about when you need to do something that requires a specific kind of equipment or training?  If your house is greatly infested with pests, pesticides are just not enough. You need to call on a professional pest extermination team. When you need to make a video with 3D effects, you need someone who’s expert in video editing.

If you are not sure on how to repair electrical appliances, you can always rely on technicians and other professionals who are good with repair and technical support.  This does not only mean saving a great deal of time and energy. It also means efficiency and safety.

These and more are the reasons why you should hire professionals that can cater to your needs. Hiring them does not only mean saving time, effort and energy. It also means efficiency, safety, and most of all, quality work.

Reference : efficiency | safety