What Are You Worth? The Different Kinds of Valuation

I have worked with many people to help them start businesses. One thing that many people understand poorly is valuation. To keep things short I am just going to list some observations.

1. Your labor value (what is your time and expertise worth for the results you produce on a competitive basis?)
2. Your ROI or investment (profit) value (similar to stock in a company for example.)
3. Your venture value (are you doing something that has a lot of potential)

Re labor value, let's take U.S. executive compensation, which is pretty much ridiculous for most of their executives, because most can be replaced by executives who will get the same results for much less compensation.

Your ROI value is the profit you produce above your labor value. This is an important concept, because the ROI value is a multiple of your compensation from an investing point-of-view. Any amount above your labor value is worth 4 to 20 times or more depending on how you produce that value. [This is the earnings multiple.]

Your venture value depends on what your labor is producing and how it will grow into the future.

You can imagine that you can get into lots of arguments about this, but in fact there are ways to calculate and resolve conflictual interpretations.

Let's have fun with this!

 

I always like to think of my value as much higher than market rates, that way I don't end up under-selling myself when I'm in a good mood or running a sale. I like being able to get a good handle on the real world values of things both in the optimistic and realistic liquidation value. I use www.IdealAdvisor.com to check my websites' value.

 

You are not the only one who wants to have a better than market rate value, lol. This is where positioning and marketing become a factor. If you are good at that you can increase your value and that's what has happened, in a way, with executive compensation in the U.S., where it is several times what Japanese executives make, I believe, for the same-sized companies.
In working with people on their businesses, I have noticed that a large percentage do not have much awareness about the importance of positioning. They may know the word, but have difficulty applying it. "Automated thinking" takes over and they go back to what they know about their business.
Appreciate the link. The one I have come across is www.domainestimator.com

 

Sometimes, it takes a long time to accurately assess yourself based on the points you've listed. What I mean by that is, how I value myself and my company today will change in 2-3 years. As my experience, income, traffic, etc. grows my evaluation will change along with it.