HOW MUCH IS YOUR COMPANY WORTH?
When a shareholder and investor wants to contribute capital to you, but you do not know how much to bid on your company.
The value of your company consists of 3 categories:
a) The value you have made in the past (the last 3 years)
b) The current value of the company you are operating and reporting recently.
These two values are reflected on the book value on the balance sheet.
It says that, in the past, when you set up a capital contribution company, what have you used it for now?
If the business is profitable, the owner’s capital must increase, if the business is not profitable but still exists, it is living off the cash flow due to capital requisition.
Where are your short-term and long-term assets?
Investors are not directly at the company often, how can they give money to a founder when they don’t know how their money will be used and managed, right?
Does this value have proven evidence from the past enough to prove what you say?
How are the internal accounting reports and tax books being settled annually?
c) Future value of the company
– Vision of the executive management
– Desire to achieve great business results
– Plan to use capital according to each sales milestone requiring additional capital
– Valuation of the company before Investment
– Investment needed for the latest period
– Valuation of the company after the investment
– How to choose a business model so that it is easy to achieve sales and profit results with the least resources
– Manage and operate the company so that it is as effective as an 8-year financial plan
– Control the generals, How to organize the company’s frontline & rear to achieve sales results.
– Measure and disclose asset statements according to accounting & financial standards.
– Buy and sell any subsidiary to increase competitive advantage and profit margin.
– How to manage the assets of the subsidiary after the investment.
If the first 2 lines are book value.
Then the 3rd line is the future value.
Messages:
– If you can’t prove the value of the first 2 lines, you will be negotiated with the value of the company reduced even if there is a big picture.
– If you do only the first 2 lines well, but lack the vision and ability to manage that vision, your value is only equal to book value = the amount of capital you have contributed + the surplus from annual profits.
– Current status: Enterprises cannot prove the past and present, worry about eating every meal, and can’t see the future.
So you want:
– Book value
– Future value
Or accept a small scale for fun while waiting for taxes … squeeze yourself.
Do not wait until the price is forced to start researching to equitize.