Business Valuation Blog | Understanding Buying / Selling a Company

What's involved in CBD business appraisal?

Posted by Business Valuation Specialists LLC on Jul 8, 2019 8:00:00 AM

CBD Business Valuation

The CBD oil business is booming. As states loosen regulations and more health benefits of the oil are realized on what seems like a daily to weekly basis, many serious financial experts are predicting serious growth for this oil, and the businesses that promote it. Forbes recently cited a study that stated that the CBD oil industry could reach $16 billion by 2025. Another study cited in Rolling Stone is more optimistic yet, predicting a $22 billion industry by 2022. MarketWatch is expecting a 39.5% CAGR. These numbers spell huge profits and success for those investing in this bold new industry. But in this rapidly growing market, how is CBD business appraisal different than appraisals for other industries? Here's a quick look at the process.

What's involved in CBD business appraisal?

CBD oil is still a relatively new prospect in the marketplace, but its popularity is growing on a daily basis. With this strong growth, it's important that you know what your business is worth so that you can use that value to grow your company in a way that is reasonable, instead of risking your investment carelessly. Working with a certified business valuation specialist can help you make this process easier.

To start, a well-qualified business valuation specialist will take a solid look at the market. Though it's very easy, as a business owner, to get caught up in the hype and dream big based on the highest projections, a good business valuation specialist will instead look at the average numbers from a wide range of sources, making an accurate calculation of what your company's value is as well as projections of what your company will be worth in the future.

The appraisal will also look at what your competition is like and how that impacts your market share. This includes other retailers in the area if you run a shop, other websites if you sell online or other similar businesses if your focus is in a different aspect of the CBD oil industry. This allows them to understand whether you'll have competition in your existing market share or whether the lack of competition will allow for further growth.

The valuation specialist also looks at your business finances. This allows them to determine if there are areas where your company's accounting practices are strong or weak, allowing you to make corrections as needed to ensure that your company can see maximum growth in the future. This allows you to get your business into great financial shape so that you have better odds of getting a great loan from your financial institution when you want to expand your business in the future.

By having a solid grasp of what's involved in CBD business appraisal, you can gain a much better appreciation of what your company is really worth, especially with all of the wild speculation of where it's going. This will allow you to better leverage your company's assets and potential into this promising growth, making it easier to improve your company's overall position in the market. However, it's important to make sure that you're working with a certified business valuation specialist who knows how to properly calculate the value of your company using tested methodologies to deliver an accurate picture of your company's financial health.

Topics: CBD Business Valuation