When business owners think about valuation, the focus is usually on revenue, profitability, and EBITDA. And while those numbers matter, they don’t tell the whole story.
The reality is that two businesses with similar financials can have very different values based on what’s happening behind the scenes. Here are some of the hidden factors that influence what your business is really worth; things that don’t always show up on a financial statement but can make or break a deal.
Industry Position & Competitive Advantage
Where your business stands in the market affects its value. A company with a strong competitive advantage, whether that’s brand reputation, unique expertise, or proprietary technology, will always command a higher price.
Key factors that impact value:
- Market share – Are you a leader in your space, or competing in a crowded field?
- Barriers to entry – How easy would it be for a competitor to replicate what you do?
- Pricing power – Can you charge a premium, or are you in a race to the bottom?
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Article is courtesy of Dave Bookbinder