If you are planning to sell your business, or are just curious, it’s important to know what your business is worth. Knowing your value is essential to plan your financials and attracting investors as well as negotiations with potential partners and purchasers. Finding out the value of a business can be a challenge but there are several crucial steps you can take to get started.

One of the most commonly used methods to assess a company’s worth is to examine the company’s assets and liabilities. This method examines everything that the business owns that is of value, like inventory or equipment, and read the article subtracts what the company owes such as commercial mortgages or business loans. This value is often called book value, liquidation value, or net asset value.

Another way to determine a business’s value is by looking at its revenue and sales. This method calculates a company’s total sales and revenue before subtracting operating expenses and then multiplying it by an industry multiplier. The number you come up with is an estimate of what the company could sell for if it were to go on sale.

The size, the industry, and management team are also factors that influence the value of a company. Larger corporations are valued higher than smaller ones since they have the resources to dedicate to product development and marketing. Also, strong leadership and a highly-trained workforce are typically viewed as a big selling point for a business.