In this article, we’ll discuss the four ways how bootstrapped startups value themselves. That said? There is only one perfect way to value anything. The intersection of Supply and Demand.
The first question I’d ask is, “If you’re bootstrapped, WHY do you care what your valuation is?”
Then, I’d tell you, “Congrats for bootstrapping your business! Thats awesome.”
MY BIG FAT ASSUMPTION:
I’m going to go ahead and assume that you are interested in what your valuation is because 1) you now want to raise money or 2) hopefully, you are thinking of selling and want to figure out what your Enterprise Value.
P.S. If you’re just curious, RIGHT ON.
FOUR WAYS YOU COULD USE TO DETERMINE VALUE:
Comps: Go out and find comparable companies and see how they value themselves. You might have to find later stage businesses that have sold and therefore know how the market values them. Likely going to be a Multiple of EBITDA, maybe a multiple of Revenue. Depends on the market.
Corporate Finance: Use a Discounted Cash Flow model or another analogous corporate finance valuation model. These can be complex and really don’t work for business without revenue and growth history.
Get a formal valuation performed: There are companies that will help you determine the value of your business usually based on a combination of the above two techniques.
Go To Market: The MOST accurate way of determining what your bootstrapped businesses is worth than to see what someone is willing and able to pay for it. Period. Everything else is an educated guess.
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