Ups and downs are a part of the business where some losses tend to cause long-term economic damages. In cases where a negative element causes disruptions, businesses head to legal approaches for redressal. They move to the court to get compensated for losses caused by a third party. In addition, they also work towards preventing such damages in the future.
That’s what almost every business owner should do in case an unauthorized individual or organization takes the wrong route. But the question here is how much economic damage you can claim. For this, you need to understand how to evaluate the amount of loss caused by an act or an individual. Commonly used approaches to measure the impact include:
- Loss of Profit Measurement: For short-lived losses, a business can evaluate the loss of profit during the period. Measure the profits you have earned and compare them against what you would have earned if the damage wasn’t there. This provides a straight calculation of how much you should claim.
- Reasonable Royalty Method: When a brand’s secret is stolen, it leads to life losses. In such a case, you lose the profit only you would have earned. Thus, you can claim a reasonable royalty for the loss of intellectual property.
- Business Value Loss: A wrong information about a business can break its business value. This estimate of how much value your business lost to the act gives you a measure of the economic damage.
While measuring the loss in the first case is simple, it gets complicated in the others. You can hire a business valuation expert to analyze and provide accurate values that can cover your present and future losses.