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I want to know, when you come up with an idea and want to implement it and to start business , do you firstly estimate the market value of the business and how can you estimate it? A rough but not too rough estimation is enough...

Thanks!

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You might want to check out his question: answers.onstartups.com/questions/5762/…. It has a good discussion about evaluating what a company is worth – Jarie Bolander Jan 9 '10 at 14:15

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Confused. If you only have an idea, the market valuation doesn't exist. Now, if you have an idea that translates into intellectual property (patent, trademark, copyrights), then you may have something of value. But, better/easier to have a proven customer base, a repeatable business model, and positive cash flow and earnings. Or you could create a business proforma of all of these, and if people believe you, then you could get a market valuation. http://en.wikipedia.org/wiki/Pro_forma

Once you have the earnings, 4 times earnings is a good rule of thumb for small businesses, or some use 2 times revenue. The stock market tends to be somewhere around 15-20 times earnings (thus the PE ratio).

earnings/net-profit = revenue-expenses

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up vote 3 down vote

I'd look at it this way:

  • "an idea" - not worth anything
  • "an idea and a team" - worth the value of the team
  • "an idea that's been well executed" - (hard not to say priceless here) there many metrics to value this (see Pete's post)
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