Ditch the accountant – BizEquity calculates your business’ value instantly

To small entrepreneurs, talking about business valuation is like talking about life savings to a first-year student; it’s extremely important, but not the sexiest topic. Through a business valuation, entrepreneurs can find out exactly what their enterprise is worth, allowing them to make better strategic decisions with it.

Naman Shah, BizEquity’s head of operations for Asia, explains that it’s a matter of making the most out of your business. “As a business owner, you might one day want to sell your business. Research shows that if you know your worth for about five to ten years before you are about to sell, you tend to sell for 25 percent higher, because you know to start planning for certain metrics which matter when you exit.” But that’s not all. Even if you are not looking to get rid of your enterprise, there are several other things you need to prepare for.

Naman Shah, head of BizEquity Asian operations.

“If you’re looking for, say, estate planning, or passing on your business to the next generation, then you’re also required to know your value,” Shah points out. “Say you want to get key person insurance or you’re looking for any kind of financing. The majority of a business owners’ biggest asset is their business. If you’re doing asset valuation, it’s important to know what your biggest asset is worth. Otherwise, a wealth planner advising on your assets will probably not give you sufficient or accurate advice. So we think business valuation is the starting point, which leads to insurance, estate planning, financing, business advisory, succession planning; it’s required for all these purposes.”

Big enterprises don’t have to worry about that; they usually have access to all kinds of data and financial services for their business. Professional business valuations by accountants can cost upwards of US$5,000 and take three or four weeks to complete. That’s out of reach for small and medium-sized enterprises.

That’s what serial entrepreneur Michael Carter realized when he worked with investor Warren Musser in Philadelphia. As he interviewed business owners day in and day out, he found out most of them had never even thought to research what their businesses were worth. That’s when the idea for BizEquity was born, as Shah, who studied Economics at NUS and joined the team early on, tells Tech in Asia.

Putting a number on your business

While coming up with business valuations requires lots of technical know-how, BizEquity is easy to grasp: it’s a cloud-based service where a business owner or a financial advisor can value a business by logging into a website and following a seven-step process.

After entering certain details such as specific industry, income, asset value, etc., the algorithm under the hood calculates the business’ value. What’s more, the service then compiles a 29-page report that contains detailed data about the business and information about business valuation.

It’s particularly impressive how the algorithm can calculate business value differently depending on factors like industry and business size. The valuation changes instantly when you change a variable on the BizEquity dashboard. It should be noted, however, that it is currently not ideal for valuing tech startups because of the vastly different requirements.

The BizEquity business valuator uses seven basic steps to calculate a business’ worth.
(Pictured: sample company Beta International)

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