A new breed of software tools aims to give access to big-business financial analysis to small business owners. For far less than it costs to hire an accountant, a math-averse entrepreneur can subscribe to one of a number of user-friendly online services that can extrapolate strategic data from your inputs, or even directly from QuickBooks.
One vendor has trademarked the term “valuation as a service” to describe the software it provides. The data these tools help generate are useful to any business owner hoping to sell the company, get a bank loan, or share financials in a contract bid. Some users even claim the information they’ve gleaned has helped them increase their value.
Writing in Colliers’ Magazine last year, Scott Gabehart, author of The Business Valuation Book and professor of valuations at the Thunderbird School, and Michael Carter predicted:
The rise of the Internet, together with the public availability of real-time comparable metrics, social media technologies, and well-published rules of thumb and expertise, lead us to believe [valuating a company] can be made a science. Valuation and growth data should be retrievable in real-time and for a fraction of the cost of traditional methods—assisting the small business owner along with their clients and partners. A new data democracy has arrived to fuel the growth and performance of the entire small business ecosystem.
Carter is CEO and Gabehart VP for BizEquity, the "valuation as a service" provider. BizEquity claims that 75 percent of business owners do not know what their company is worth, and puts the “typical cost of a formal offline business valuation” at $8,000. The “cloud-based valuation engine” promises to deliver a valuation estimate to a business owner in real time, “for 1/25th the cost and in 1/25,000 of the time.” BizEquity execs say they are committed to “helping to democratize financial information, data, and intelligence for the small and emerging business community.”
BodeTree calls itself “the easy and affordable way to track and understand what’s going on in your business.” The suite of subscription-based financial analysis programs syncs with QuickBooks. Subscribers to the extended service can get real-time company valuations
In a testimonial on the BodeTree website, Sharon Hamilton, owner of Sentinel Fence & Contracting in Scottsdale, Ariz., says the most exciting part of using the software was seeing a monetary valuation for her company. “It shocked me that it was as healthy as it showed and I can’t think of a better way to make myself feel good about what we’re doing than to see a value that was much more than I expected,” she says in a video. Another customer, Joe Ritz, owner of Sports and Collector Car Center in Tempe, Ariz., testifies that the tool allowed him to strategize and forecast and grow his company's value more than 50 percent in 6 months.
uValue, “the corporate valuation app,” is available free from iTunes. The creators, business professors at Dartmouth’s Tuck School and NYU’s Stern, wanted “anyone who is keen to do a good valuation, anywhere, to have access to self-contained, fully-functional tools to do so." They say the app presumes basic familiarity with financial statements, but is “fundamentally educational in its intent” with pop-up boxes that define and explain every input or concept, a companion mini-textbook on valuation, and links to a data set that give you industry data benchmarks.
Valuation App is a free android app launched last June. It is positioned by creator Sohin Shah, who sought funding for its development on Appbackr, as a tool for students, entrepreneurs, venture capitalists, and other finance professionals “who would like to perform complex calculations on the go, without resorting to their excel spreadsheets for available models.”
Have you used an online valuation tool for your business? Share your experience in the comments.