The Fallacy of Online Business Valuation Calculators

RALEIGH, NC – Jeff Snell has written the following article addressing the many shortcomings and failures involved in relying upon so called “Online Business Valuation Calculators”.

If you’ve been a business owner or advisor for any period of time you have surely realized that no two businesses are the same. Even franchises that attempt to model themselves similarly have different geographic locations, different employees, customers, sales, costs, management and marketing requirements which all impact the valuation of a particular business.

Any online (non-expert human valuator/appraiser) has to rely on averages and assumptions – and unfortunately there are too many that are too important for current technology to address effectively.

Even people who offer these “tools” on their website state that “determining the worth of your business is as much of an art as science”. Really? How does the online calculator process the hundreds of different factors that fall into the ‘art’ category? Fact is that they just don’t. Other disclaimers “this is no more than a back of envelope calculation”. Back of envelope? What good is that? This is YOUR BUSINESS – not a used car! Then you may hear that businesses valued under $5 million in enterprise value may be valued with […]

March 20th, 2017|