Four reasons to bring in a part time CFO to valuate your business

If you’ve ever started your own business, you’ve experienced the thrill of seeing an idea turn into a profit-making entity that employs people and contributes to the economy. As your business goes from strength to strength, you know that it is increasing in value, but it’s difficult to say by how much. Although there might be some allure in not knowing quite what your business is worth (you can always dream big if you don’t know the real figures!) there are several reasons why it makes sense to get your company formally valuated on a regular basis.

Many business owners are put off by the idea because it sounds like a complex, technical process. And it is. Most business owners – unless they have formal financial backgrounds – would battle to complete the task using an accepted financial valuation method. For this reason, we recommend bringing in a suitable part time CFO to carry out the task.

Here are some reasons why it’s a good idea to have this done annually.

1. Having a part time CFO conduct a valuation on your business can help attract finance for expansion. If you’re looking at opening new branches or buying new equipment, chances are you’ll need a loan. If the bank you’re trying to borrow from is able to see how much the business is already worth, you’ll increase your chances of getting your finance approved.
2. Having a part time CFO conduct a valuation on your business acts as a safety net if something were to happen to you. Jean Murray, Business Law expert on com says the following: “Something could happen to the business owner that would mean a major change in the business.

“For example, the owner might die or become incapacitated. Having a current business valuation would help the family deal with the potential sale or dissolution of the business.” It’s an unpleasant eventuality to contemplate, but it does provide comfort to know that having an up-to-date valuation on your business would help and protect your loved ones if something unforeseen took place.

3. Having a part time CFO conduct a valuation on your business could help you sell or merge quickly if the opportunity arose. The business environment is changing almost constantly. A drop in the stock market or the exchange rate could provide you with opportunities that need to be acted on immediately. Having an up-to-date valuation means you won’t have to miss any of those.
4. Having a part time CFO conduct a valuation on your business can help you determine when to retire. Wealth manager Gordon Bernhardt warns that small business owners sometimes think they’re sitting on more wealth than they are. Hoping to retire at 55? Getting your business accurately valuated will help you know if you’re on track to do so. “Small business owners often have an inflated sense of the value of their company,” says Bernhardt. “If you are counting on income from the sale of your business to support you in retirement, the sooner you determine whether your estimate of your company’s worth is realistic, the better.”

Planning for your future, providing a sense of security for your family, and enabling your business to grow timeously are some of the compelling reasons to get a competent part time CFO to accurately assess the value of your business. If you’re looking for a trustworthy executive to fill this role, contact The Finance Team. Our highly qualified, skilled finance professionals will assist your business for the period of time you need it and no more