5 Mistakes That Can Give Wrong Business Value

When you’re doing business, finding the correct business valuation should be your primary goal. However, while checking the business value if you feel that it is not making sense, then there’s some mistake in the calculation process. 

That’s when you need an expert professional to check and compute the right business value for you. If you’re in New Jersey, then ThomasRoss Financial Group is the best company for you to approach. 

From our business valuation services New Jersey, you can now get your business valued during buyouts, divorce, mergers and acquisitions, giftings and estate planning. 

Along with sales, marketing, and product development, if you’re also required to analyze financial statements and find business value, then, it will become hectic for you.  therefore, it’s better to entrust professionals like ThomasRoss Financial Group with the task.

Small or big – whatever might be the size of your business, if there are miscalculations in business valuation, then you may face financial instability in the long run.

Are you planning on selling your business? Then, with an inflated business value, you may lose a potential buyer. To help you, we have listed some common mistakes that give the wrong business value.

Using wrong business valuation methods

If you get an absurd and unreasonable business value, then be sure that a wrong method has been used for calculation. Financial experts generally use 3 major approaches – income approach, market approach and, the asset approach. 

But how will you select the suitable method? Leave it to the experts. They’ll select the method that will give the true economic value of your business. Make sure that your financial consultant calculates the value of non-operating assets and off-balance sheet liabilities. Without these items, your business valuation is not possible.

At ThomasRoss Financial Group, you’ll get the best accounting professionals for business valuation services New Jersey.

Failing to assess the potential risks

No business valuation method can help you get the correct result if you’re not able to assess the probable business risks. If you’re a non-finance person, then you’ll not know about the terms like a risk-free investment, discount rates, and market capitalization.

Remember that the capitalization and discount rates are unique for every business depending on the business risks. It’s better if you don’t try calculating the same. 

Approach ThomasRoss Financial Group and avail our business valuation services New Jersey. Our financial advisors will assess the potential risks and determine the discount rates accordingly. Hire financial experts and avoid this nasty mistake!

Making mathematical errors

This is the most common mistake which you may make while calculating your business value. If you have made a mathematical error in the beginning, then the whole calculation process can go wrong.

Be careful while you make the calculations. Otherwise, all your efforts will go in vain. Moreover, it’s a near-impossible task to identify the mathematical mistake which you have made from those vast number of financial data. 

Be wise when you choose the accountant. If you hire our accountants from our business valuation services New Jersey, then we assure that there will be no mathematical errors. Our consultants have years of experience in business valuation; hence, they’ll provide you error-free results.

Hiding operating costs

If your income statement is showing high profits and low expenses, then there are definitely some hidden costs that you have not recorded in the income statement. You may feel that it’s good to show a profit in the financial statements, however, don’t forget that hiding costs will do no good to your business.

You can fool people with your statements, but you cannot fool yourself! Hidden or not – all costs need to be paid and accurate business value can be derived only by considering them. 

Get more guidance on these matters from our certified accounting experts.

Forgetting to calculate assets and liabilities

Every asset which comes into the business increases the business value and every liability decreases the same. What if you forget to include some of them while calculating the value? Simple, the business valuation will be either inflated or deflated! Both situations are harmful to your business.

Don’t panic if such a situation arises. Just dial the number of ThomasRoss Financial Group. Our accountants will immediately solve this problem and recalculate the amount for you.

If you’re in doubt about the accurate value of your business, seek help from our qualified financial experts. Business values are very important. Hence don’t mess with the numbers, rather take help from the professionals and get your business valued correctly.

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