The following are some business valuation methods that you can use:
- Business asset value – Add up all the assets including equipment and inventory and subtract any debts or liabilities (include tangible and intangible assets e.g., intellectual property, brands, goodwill)
- Base it on revenue – your annual sales figures
- Discounted cash-flow analysis – looks at the business’s annual cash flow, projects it into the future and then discounts the value of that future cash flow towards a present value.
- Look at current marketplace value and your industry – Some industries may come up with their own formulas in valuing a business
- Use “ROI” (return on investment) method – calculate ROI based on a selling price you have in mind or a selling priced based on the ROI you set. The formula to do this is your net annual profit divided by your selling price, then multiplied by 100.