How Do You Value a Remote or Virtual Business?

If you go onto freelancing platforms such as the likes of UpWork and others, you might come across the rather intriguing discovery of some big money businesses which perhaps don’t even have a website, in the form of employers (gig/job posters) whose expenditure record on such platforms is through the roof. These are the operators of remote or virtual businesses and if you’re one of them and you want a means through which to get a valuation of your business, it naturally makes for quite a challenge because I think we can safely say that this isn’t in any way a conventional business.

 

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Conventional businesses are otherwise much easier to value in that the typical valuation process takes into account business elements such as profits, the value of the business’ assets, the business’ accounting records (and subsequently its growth trajectory) and anything else which contributes to the business’ overall value.

 

There are very little physical assets (if any) officially tied to a remote or virtual business however and so on the assets front it already poses quite challenge tallying up the total value. If I can revisit the freelancing business example just for a second, the likelihood is that the person running the business perhaps has their own computer while everybody forming part of their team also has their very own computers, working from all across the world. You would have no legitimate claim to the credentials of all your freelancers adding to the overall value of your business, for instance, quite simply because the reality is that those freelancers could disappear overnight for whatever reasons.

 

You perhaps don’t have formal business premises either and perhaps only hire the services of a bookkeeper to balance out the books only for compliance reasons, otherwise the accounting records you likely keep are done so in a rather informal manner which is not really recognised by business evaluation experts representing someone who might want to invest in or buy your business.

 

All of that said however, since remote and virtual businesses are seemingly taking over in a huge way, it’s becoming a little bit easier to institute some elements into your business which will help you value it much easier.

 

Get Professionally Audited

 

This doesn’t mean you need to bring in a full-time accounting team to manage all your financial affairs and collaborate with an auditing firm every so often. Software solutions such as the Sage Accounting Package or perhaps even some bill of material software such as Sage Bom will do just fine in keeping a digital record of your operations. The numbers associated with your business’ core operations, even if facilitated remotely or virtually, are where the valuation channels reside.

 

Get it Indexed by the Major Search Engines (Google)

 

If you can get this right (it’s actually as easy as submitting your websites to Google for indexing) then half your job is done. What’ll then happen after your site (your online business) gets indexed is that ratings services will follow suit and also rank your site according to its apparent value. They look at elements such as how much you charge for your services, how much traffic your site gets (implied conversion rate) and what your profit mark-up likely is. These types of rankings usually draw interested potential buyers which you might be surprised as to their origins and their insights into your remote or virtual business.