Content, Channel markets, Mergers and Acquisitions, Channel investors, Small business

New Small Business Valuation Tool for Entrepreneurs, SMB Owners

Putting a dollar amount on what your small/medium sized business is worth can be a very difficult task. In fact, 85 percent of the world's 200 million small businesses don't know what they're worth. Enterprise level companies can even struggle with this and often hire outside help to assist with the evaluation. There are many factors that can go into a valuation. Plus, small business owners can often be emotionally attached to the business -- failing to really look at the situation objectively.

For more on VAR, MSP and CSP valuations visit the ChannelE2E FAQ section.

What's the solution? Purch's website wants to take a lot of the guesswork out of evaluating the worth of small and medium sized businesses and has launched the Report Card, powered by BizEquity. The Report Card is a small business valuation service that gives small-to-medium businesses realistic estimates of their value and comparisons with regional and national industry averages to help SMB owners better understand and grow their businesses, the company states. relaunched this year as a content and commerce marketplace that connects industry-specific communities of small business owners with the experts who can help them grow their businesses. This new Report Card, which was developed in part with BizEquity, is the latest tool in the company's growing SMB portfolio that gives small business owners access to business development services that were previously unavailable to them. Soon will also allow SMBs to buy, sell or advertise their business, manage local listings, monitor reviews from social sites and keyword/SEO performance, and compare business services rankings in relevant industries.

Greg Mason, CEO of Purch, has compared the new tool to Zillow, where homeowners can look online to see how much their home is approximately worth at the moment. Much like Zillow, the tool can help business owners (as opposed to home owners) understand their current value, and gain insight into their competitive standing.

The Report Card can give insight into key valuation metrics including

  • Profit
  • Revenue
  • Cash
  • Capital Efficiency and Solvency
  • Operative Efficiency
  • Credit and Bankruptcy Risk
  • Liquidity

Even if you’re not thinking of selling anytime soon, this data could be important to know. The valuation process can help estimate the real value of your business so you can make fact based decisions for your company.

Our own industry coverage, by the way, suggests well-performing MSPs are worth about 5 to 7 times annual EBITDA. For more on VAR, MSP and CSP valuations visit our ChannelE2E FAQ area.