Maximum value from a business
Is your business creating maximum value?
One of the services I provide is a valuation to an owner that wants to sell their business. Almost without exception, the owner of the business overvalues their business. There are many reasons this happens but I think it mostly comes from business owners seeing shares trade on Wall Street based on the gross sales or gross revenue of the business. I have recently done valuations where the company value was just over $1,000,000 but the owner thought it was closer to $10,000,000.
Just as most business owners are unaware of the true market value of the business, most business owners are not sure how their business creates value or more importantly, how to calculate the value of the business or even the return on the investment made over the years of owning and operating the business.
In many cases, if not most, the business is the single biggest asset or investment of the business owner. To avoid treating the business as a ‘checkbook’ to pay the bills or as a job to feed the family and with little concern over the impact on either personal wealth nor the investment of time and money, the solution is to get a Business Assessment.
The Business Assessment looks at the strategies that build personal net worth as well as business net worth; maximizing the return to the business owner and their family. By understanding the value drivers of the business it then allows the owner to reduce the time and/or money in the operation or the amount of money they can extract from the business while still increasing the business net worth.
The Business Assessment also provides clear data on historical calculations, forward looking “what-ifs”, and the growth of personal net worth to the owner so they can accomplish either a retirement objective or the next business endeavor.
If you would like more information about the different types of Business Assessment, click on this link.
If you would like to see a sample 182 page Business Assessment that reports at enhancing the value of a company, click on this link
To create the Business Assessment, we use proprietary software and this includes providing you with a limited license so you can see specific changes in the business and how this impacts your personal and business net worth. In addition, this software helps educate on the relationships between business value, personal net worth growth, and the specific sales, costs, overhead, and profit within the business and clearly shows how one number, large or small, can make a huge dividend towards any end game.
A separate model demonstrates the relationships between business value, personal net worth, monthly contributions to retirement (or a desired level of liquid assets), and the performance of the business owners portfolio of investments to clearly demonstrate what they need to accomplish their overall life goals. Lastly, this software puts the acid test on the capacity to grow the business or shines a light on the underutilized capacity which has tremendous cost to the business and the owner.
After six months of licensed use of these tools, the owner can now focus on the direction of the business and operate with more effective objectives, and ensure the desired return on investment is managed with an ever watchful eye on the achievement of the end game.
If you’d like more information about how to transition out of your business, feel free to get in touch with me for a quick consultation. We’ll discuss your particular business, what’s important to you and make a plan for those first few steps.
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