There are two financial goals tied to entrepreneurship. One is generating income. The other is creating wealth.
For most entrepreneurs wealth is generated through the value they can create in their businesses. But, what a business is really worth is often hard to determine.
Today a new site was launched called BizEquity that offers business owners a tool to help estimate the value of small businesses. (Note of full disclosure — I am an unpaid advisor for this project).
What does the site offer?
And it is all free to the user.
There is also a companion blog that offers more information on business valuation.
This begs the question:
Where does the data come from. As a professional, you should know that private business sales are not reported publicly.
Reputable private business sale database services do not have “millions” of business sale deals recorded.
Private business owners of unsold businesses will certainly now share with anyone their business value estimates.
Get real – private business sales data is not free.
Small business owners are well advised to take their business appraisal seriously.
As a professional, you should make note that the site does not claim to offer appraisals. It offers only an estimate of a valuation.
I have discussed the source of data with those behind this site, and although it is proprietary, I can assure you that it is based on what they say it is.
The one thing I noticed is that while they have a large set of data, it seems to be a bit out of date…that or the source of their mashup data seems to be out of date.
The company I am with hasn’t been at the location they specified for almost 2 years. Assuming the rest of their data is in the same state, it seems as thought they should be using more relevant information.
It looks like a useful tool, I’m just wary of it’s timeliness of their data. I suspect as they grow it will become more accurate.
Thanks for the source!
Actual private business sales are reported in the tens of thousands via authoritative database services, including BIZCOMPS and Pratt’s Stats.
Facts: there is no public records of private deals. Only guesses.
Business brokers that close real deals compile reliable data that can be used in a defensible business appraisal.
Caveat user:
Read the disclaimer these guys make – neatly hidden in their site page source. Here is an excerpt:
” The estimates are made using publicly available information and rules of thumb for different industries which will be inapt and differ from the amount that would be realized on a sale in many cases because of information not available to us or other factors. In any event, they are subjective opinions. We hope they are of interest to you…”