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Pulakit Bararia

Building Snippetz la...ย โ€ขย 3m

So how do you calculate your companyโ€™s valuation? Hereโ€™s the simplest way to think about it: 1. Forecast Future Earnings: Start with what your business makes now and apply a growth rate. Example: Year 1: $100K โ†’ Year 2: $120K โ†’ Year 3: $144K. 2. Adjust for Time (Discounting): Money now is worth more than money later. Use a discount rate (e.g., 10%) to calculate what those future earnings are worth today. 3. Add Long-Term Value (Terminal Value): Estimate how much your business will be worth after 3โ€“5 years. Example: Coffee shop: Discounted future profits = $330K. Terminal value = $500K. Total Valuation = $330K + $500K = $830K. Simple: future cash + long-term or you can go like this 1. Find a Key Metric: Use your companyโ€™s profit, revenue, or EBITDA (earnings before interest, taxes, etc.). Example: Your profit is $100K. 2. Apply an Industry Multiple: Look at what similar companies are selling for (e.g., 5x profit). Example: $100K ร— 5 = $500K valuation.

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