Why Companies With No Real Asset Value So Much: 7 Essential Elements They Consider
Do you actually consider that a company with no real asset can value so much as $40 billion? Well, you are going to find out in this short article today.
Today, I believe you will benefit from some of the simplest elements in valuing a company. So let’s begin, the 7 essential elements most companies consider when they value themselves based on milestones.
I was searching for a topic this morning when I came across a discussion on Reddit “How Companies such as Uber and Ashley Madison Value Themselves”? The discussion caught my attention when one of the participants said, “I was reading about Ashley Madison scandals and how it has sales of $115 million but values itself at $1 billion.
Even a company like Uber that has no real asset value at $62.5 billion, where did they get those values from?” and I know that some of you out there might have also wondered how they got those values?
Well, most companies value themselves based on their milestones. Let me give you one example, if you watch Uber news you will see that they always talk about their milestones.
The company proudly announced that they have reached the new milestone on April 14, 2015. Wayne Ting said, “the number of Bay Area driver-partners on Uber platform exceeded 20,000 for the first time… And we were not even halfway there just one year ago”.
Then again on June 28, 2015, they also exceeded their milestone in South Africa, and this year 2016, their target is to hit another milestone in China. Okay, in that case, let’s briefly brush over the 7 essential elements that most companies look at when they value themselves:
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#1: Business plan – The number one thing they would be proud of is that they have a business plan. They know the purposes of a business plan, that you can use it when you want to raise funds. You can also use it as a marketing tool and as a planning tool.
#2: Money – Money is a very important tool in every business, you know that. They go and raise some cash.
#3: People – They also hire people, and Remember the number 1, 2, 3 things investors look at when they value a company is people.
#4: Products – Another thing is that they build their products, and take them to the market. It might just be a company’s app or something like that.
#5: Customers – When there are no customers, there would be no sales, and when there are no sales definitely there would be no profit. They carefully figure out who their major customers are, or their target market. They may base their target on demographics, or university students of lower or upper grade, geographical or what have you.
#6: Marketing – This is very, very important. Marketing is the propeller that propels their products to the desired market, I mean the right market. It also helps your brand name gain exposure, when handled effectively.
#7: Risk – So what most venture capital firms do is that they look at a company’s risk factors, if the stage of the risk of the company is less, generally, they worth more money on all those stages.