Business Valuations

Business valuations are intensive internal auditing processes that help you understand what your business is worth in a given market. Generally, business owners are motivated to get a valuation when they are interested selling their business, expanding operations, or acquiring funding. When this decision is made, a third-party valuation firm creates a thorough portfolio of a company’s worth based on data, forecasts, and market performance.
Business valuations use objective measures to develop an understanding of your company’s value. For most valuation firms, this process includes an expansive list of yearly financials, owner income, balance sheets, ownership agreements, employee salaries, cash flow statements, vendor contracts, sales forecasts, business plans, and exit strategies. Depending on your company’s size, structure, and market niche, these data gathering processes can grow quite complex. The most complicated valuations are generally with retail, inventory-based businesses.
Objective figures and numbers provide a logical point of departure in weighing more subjective elements of business valuations. To illustrate, valuation processes can vary between firms, with different companies utilizing different methods such as market capitalization, times revenue, and liquidation value. For cannabis business valuations, this part of the process is particularly important. Because, the startup nature of the industry makes most businesses more valuable via forecasting, as opposed to established revenue. Finally, valuation firms will use the value of your competitors’ businesses, as well as current market trends, to further develop the worth of your company.
Cannabis Business Valuations Are Important

For business people, the cannabis industry is both exciting and frightening. As such, the market constantly fluctuates under the pressures of both cannabis regulation and an overabundance of small businesses regularly entering the field. The enterprising entrepreneur realizes that this volatility presents both threats and opportunities. To capitalize on this instability, instead of fear it, cannabis business valuations give you the opportunity to pivot with internal changes and exit strategies. By understanding your worth, you open the door to liquidity. These actions ensure you safely invest your time and money.
Cannabrand feels that the best time to begin your cannabis business valuation process is now, when your company is still in the startup phase. Because, when your company is young, you can weave the valuation process into your day-to-day operations moving forward. This foresightedness will give you a real-time, constant understanding of what your company is worth. Also, understanding your value will help you develop logical strategies for expansion, partnerships, and exits. Finally, knowing your worth will help quell the many anxieties related to owning a business in the unpredictable world of cannabis.