Generally speaking, every entrepreneur believes their business is more valuable than what others may think it is. This is because an entrepreneur knows more about the inner workings of their business and will assign value to nuances that no one else could know about. There is a balance to be struck between being optimistic about what your business may be worth and being practical about what others perceive it to be worth. This is especially true when you are looking for funding from a bank, lender or investor.
The online mattress company Casper is getting ready to go public and raise funds that will be used to help them grow and expand their business. Part of going public means setting a price for the shares that will be offered for sale to investors. Price the shares too high and your business risks not raising the cash it needs. Price the shares too low and your business risks leaving money on the table that it could have used. Casper has had to adjust their share price from $17-$19 per share down to $12-$13 per share. The result is that Casper will raise $260 million dollars less than they expected to. There are many reasons for the adjustment but at the end of the day, Casper’s willingness to recognize how the market perceives it should result in a successful IPO.
Is your business currently seeking financing from banks, lenders or investors? Have you taken the time to create a reasonable representation of your business, it’s opportunities and what its history suggests it can reasonably achieve? If you are not getting what you are looking for then maybe there is an opportunity to adjust either your expectations or your presentation of what is possible. It’s not reasonable that a bank, lender or investor would know your business as well as you – be measured in how you present your business so that you can access the funding you need.