In a typical business valuation, the value of a business is derived from a combination of three valuation approaches: an asset based approach, an income based approach, and a market based approach. The most commonly applied approach for most valuations is the income based approach. Just like the name implies, an income based approach revolves around the ability of a business to generate income or cash flow. There are various methods under the income based approach, but all methods revolve around either the past performance of a business, or the projected future performance of the business. Considering this, the solution to increasing the value of your business sounds simple, increase your income.
Read the rest of entry »